Berliner Boersenzeitung - Oil prices sink on Middle East hopes, yen extends gains after joint intervention

The positive development in the five-month Middle East war did little to support Asian equities, with tech chipmakers SK hynix and Samsung dragging South Korea's Kospi down after Friday's record-breaking rally.

The US president said Sunday that negotiations would cover the Strait of Hormuz -- a route for global energy supplies that has become a key sticking point in the conflict -- and ultimately, the denuclearisation of Iran.

His announcement came after he had threatened to hit the Islamic republic "very hard" and was reportedly considering renewed attacks including against energy infrastructure.

He pulled back from that threat Saturday, saying the "perimeters" of a deal were there.

"Now what we're doing is we're talking to them in the form of a negotiation. It begins tomorrow afternoon," Trump told reporters aboard Air Force One on Sunday, without providing details of the venue or participants in the talks.

The US president said the planned strike would have been "the biggest attack since World War II".

Also on Sunday, Iran said it was nearing a deal with Oman over a new route through the strait.

A dispute over control of the waterway sparked the latest flare-up in tensions in the region, as Tehran refused to let ships travel any route other than one which hugs the Iranian coast.

The drop in crude prices -- both contracts fell more than five percent at one point -- was also helped by an agreement between Saudi Arabia, Russia and five other key members of OPEC+ to boost production by 188,000 barrels a day from September.

Investors were also keeping a close eye on currency markets after Trump confirmed that the United States had intervened jointly with Japan to support the yen, calling it a "signal of friendship", while officials said they were ready to act again.

The Financial Times said Friday that the US Treasury had joined with Japan to prop up the yen for the first time in nearly three decades.

Trump said the US will see "financial benefit" from the move and "it's also good for the world economy".

The Japanese unit soared at the end of last week after wallowing around its weakest level since 1986, as it was hit by higher US interest rates, rising oil prices and persistent capital outflows.

Japan's Finance Minister Satsuki Katayama also confirmed the joint intervention, saying it "countered excessive volatility and disorderly movements in the Japanese yen in recent months".

"We will not hesitate to conduct further joint intervention," she added

US Treasury Secretary Scott Bessent posted on X that "we will not hesitate to participate in further joint intervention", citing economic security and the US-Japan alliance as some of the reasons behind it.

"The significance of recent developments may not be the intervention itself, but the message it sends: markets are increasingly coming to believe that excessive yen weakness is no longer viewed as solely Japan’s problem," Masayuki Nakajima, of Mizuho Bank, said.

Stephen Innes at SPI Asset Management said: "The significance is that Washington has demonstrated a willingness to lean against disorderly dollar strength when it threatens an important ally and begins destabilising broader markets."

Equity markets were mixed after last week's extreme AI-linked volatility that saw wild moves in the Kospi ending with a record 17.9 percent rise on Friday, as SK hynix piled on 30 percent and Samsung almost 27 percent.

The index sank at the start of this week, with the chipmakers both losing around seven percent.

There were also losses in Tokyo, which has also been at the forefront of the tech volatility, as well as Shanghai, Sydney and Singapore.

Hong Kong rose along with Taipei, Manila, Wellington and Jakarta.

The tepid performance came even after a blockbuster day on Wall Street, where Amazon surged more than 15 percent as it posted forecast-busting quarterly profits and revenue increases.

The surge added to confidence about artificial intelligence investments amid questions over the payoff, a day after Microsoft also wowed investors with strong results.

- Key figures around 0300 GMT -

West Texas Intermediate: DOWN 5.2 percent at $80.26 per barrel

Brent North Sea Crude: DOWN 4.7 percent at $83.77 per barrel

Seoul - Kospi: DOWN 4.0 percent at 6,329.17

Tokyo - Nikkei 225: DOWN 1.7 percent at 63,240.51 (break)

Hong Kong - Hang Seng Index: UP 0.1 percent at 25,908.67

Shanghai - Composite: DOWN 0.7 percent at 3,805.21

Dollar/yen: DOWN at 156.59 yen from 159.11 yen on Friday

Euro/dollar: UP at $1.1531 from $1.1530

Pound/dollar: DOWN at $1.3472 from $1.3480

Euro/pound: UP at 85.59 pence at 85.53 pence

New York - DOW: UP 0.5 percent at 52,485.03 (close)

London - FTSE 100: DOWN 0.3 percent at 10,868.05 (close)

(P.Werner--BBZ)