US Threatens Iran With Unprecedented Economic Pressure

Global stock markets declined on Friday as the United States threatened to increase economic pressure on Iran to end the ongoing Iran war. U.S. Treasury Secretary Scott Bessent announced a maximum pressure campaign involving unprecedented measures, including the potential extension of a naval blockade. These threats coincided with a report from the UK Maritime Trade Operations that a drone struck a tanker transiting the Strait of Hormuz.

Geopolitical tensions drove Brent crude futures to between $87.68 and $88.33 per barrel. The resulting volatility weighed on Wall Street, dragging down the S&P 500 and Nasdaq, while European shares ended a four-week winning streak.

Simultaneously, U.S. economic data showed an unexpected 0.6% drop in July retail sales and a sharp decline in the University of Michigan Consumer Sentiment Index to 51.0. These figures, alongside weak payrolls and inflation reports, led traders to believe the Federal Reserve System is more likely to hold interest rates steady during its September 15-16 meeting. In Asia, the yen strengthened following reports that the Bank of Japan may raise interest rates in September and accelerate subsequent hikes.