The US-Iran military standoff and the blockade of the Strait of Hormuz continue to rattle global markets. US President Donald Trump on Tuesday categorically denied any negotiations with Iran, stressing that the naval blockade remains fully effective. Iranian Parliament Speaker Mohammad Bagher Ghalibaf responded that the Strait of Hormuz will remain closed until Washington meets Tehran’s conditions. Meanwhile, the United Arab Emirates announced a suspension of trade, commercial, and financial transactions with Iran, further escalating geopolitical tensions in the Middle East.

Trump stated in his latest announcement: “There are no negotiations taking place with Iran, and there are no plans for any in the future.” US officials further revealed that Trump has instructed his team not to engage in any talks until Iran is prepared to sign an agreement. Market sources indicate that Washington is considering reducing its military presence in the Gulf region after the war ends, signaling a strategic reassessment of America’s long-term troop deployment in the Middle East.

The UAE’s actions drew the most attention. The country announced a suspension of trade, commercial, and financial transactions with Iran, and claimed it detected two ballistic missiles launched from Iranian territory toward the UAE, targeting maritime traffic. Iran immediately dismissed the claim. The UK Maritime Trade Operations received reports of vessels being struck by projectiles in the Strait of Hormuz, further intensifying shipping safety concerns. Israel also launched airstrikes on a military airport in Syria, raising the risk of multi-front conflict across the Middle East.

Financial Market Reaction

Safe-haven assets and risk assets moved in markedly different directions. The US dollar index extended its sideways trading above the 99 level for nearly two weeks, closing up 0.01% at 99.65. The benchmark 10-year Treasury yield settled at 4.708%, having risen as high as 4.75% intraday—its highest level since January 2025. The 2-year Treasury yield, which is more sensitive to Federal Reserve policy rates, settled at 4.181%.

Spot gold traded lower throughout the day, accelerating its decline after Trump claimed that “the Strait of Hormuz is open and operating normally,” ultimately closing down 1.86% at $4,334.57 per ounce. Spot silver fell even more sharply, down 3.72% to $63.34 per ounce. The pullback in gold reflects the market’s immediate reaction to Trump’s remarks, but shipping risks and supply disruption concerns continue to dominate the crude oil market.

International oil prices extended their rally. WTI crude settled up 0.3% at $84.34 per barrel, while Brent crude rose 0.26% to $91.32 per barrel. Market participants noted that the gap between the actual navigational status of the Strait of Hormuz and the various claims being made will be a key variable for near-term oil price volatility.

All three major US stock indices closed lower. The Dow Jones Industrial Average fell 0.2%, the S&P 500 dropped 0.69%, and the Nasdaq Composite declined 1.33%. Semiconductor and memory chip stocks bore the brunt of selling: SanDisk fell 9%, South Korea’s SK Hynix dropped more than 9%, Western Digital and Micron Technology both declined 7%, and Nvidia fell 2%. The Nasdaq Golden Dragon China Index closed down 1%, while Alibaba’s US-listed shares bucked the trend with a 2.8% gain.

In European markets, Germany’s DAX 30 fell 0.8%, the Euro Stoxx 50 declined 0.95%, and the UK’s FTSE 100 edged down 0.07%.

Asia-Pacific Market Performance

Hong Kong’s Hang Seng Index closed up 0.07% at 25,471.15, with market turnover of HK$255.54 billion (approximately $32.6 billion). The Hang Seng Tech Index fell 0.9% to 4,739.18. On the sector front, innovative drug stocks strengthened, mainland property and agricultural cultivation stocks rose, and mainland banking stocks recovered. Large language model concept stocks were subdued, while some semiconductor names declined.

Among individual stocks, Chinese property developer Zhengrong Properties (6158.HK) surged 125%, Star Legend (6683.HK) jumped nearly 35%, Chow Sang Sang (0116.HK) rose 19.1%, GenScript Biotech (1548.HK) gained 8.4%, WuXi Biologics (2269.HK) climbed more than 5%, and Alibaba (9988.HK) advanced 3.7%. On the downside, Zhipu (2513.HK) fell 13.3%, Xunce (3317.HK) and Kingboard Laminates (1888.HK) dropped more than 8%, Hua Hong Semiconductor (1347.HK) declined 7.9%, Chinese chip designer GigaDevice (3986.HK) and Montage Technology (6809.HK) fell more than 6.5%, while Lenovo Group (0992.HK) and Horizon Robotics (9660.HK) dropped more than 5%.

China’s A-share market opened lower in the morning session before staging a choppy recovery in the afternoon. The Shanghai Composite Index closed up 0.19%, the Shenzhen Component Index fell 0.56%, the ChiNext Index declined 0.92%, and the Beijing Stock Exchange 50 Index rose 2.67%. Combined turnover across the Shanghai and Shenzhen exchanges reached CNY 2.4 trillion (approximately $356.4 billion), an increase of more than CNY 13.3 billion (approximately $2.0 billion) from the previous session. More than 3,200 stocks across the market closed lower.

Grain concept stocks surged, with Chinese seed company Qiule Seed hitting the 30% daily limit and Shennong Seed reaching the 20% limit. More than ten stocks including Dabeinong, Dunhuang Seed, Nongfa Seed, Jingliang Holdings, and Longping High-Tech all hit their daily upper limits. Pork stocks remained active, with Luoniushan locking in its second consecutive limit-up. The domestic operating system sector rallied sharply in the afternoon, with Chinese software firms ArcherMind Technology, Kylinsec, and China Software all hitting limit-up. On the downside, Kuaishou concept stocks, computing power leasing, cloud gaming, and CRO concept sectors underperformed. N Pinzhun, the most expensive new listing on China’s A-share market this year, closed up 516.44% on its debut at CNY 1,152 per share (approximately $170).

Key Corporate and Policy Developments

OpenAI announced it has temporarily slowed training of some frontier models for a two-week period to strengthen safety and monitoring. The move echoes external concerns about the risk of AI models “going rogue” and signals that the company is adopting a more cautious development strategy.

Chinese chip designer GigaDevice released its first-half results, with net profit surging 1,091.5% year-on-year, a standout performance. The Shanghai Stock Exchange, in accordance with regulations, suspended trading accounts of investors involved in abnormal trading of Chinese flooring maker Elegant Home-Tech, demonstrating regulators’ resolve to crack down on market manipulation.

Market sources indicate that AI startup Anthropic is expected to launch its IPO process within weeks, which would be a major capital markets event in the AI sector if it materializes. South Korea denied reports that chips would be its first investment in the United States. India is considering lowering sugar import tariffs to curb surging domestic sugar prices.

On the policy front, China’s National Financial Regulatory Administration is supporting mainland insurance institutions to invest in Hong Kong-listed exchange-traded funds (ETFs) through the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs, helping deepen capital market connectivity between the two markets. Housing provident fund policies also saw major adjustments, with withdrawals now permitted for home decoration and property management fees, and the income threshold for rental use removed.

Key Focus Areas Ahead

Looking forward, investors should closely monitor several critical variables. First is the trajectory of the US-Iran conflict, particularly the gap between the actual navigational status of the Strait of Hormuz and the various claims being made. Second, the 10-year Treasury yield has already hit its highest level since January 2025; if it continues to climb, it will put pressure on global risk asset valuations.

On the weather front, market sources indicate that a super El Niño event may form this winter, with a high probability of being the strongest on record, which could have far-reaching implications for global agricultural prices and energy demand. Taiwanese power semiconductor manufacturers are reportedly preparing a third round of price hikes, which also warrants attention for cost pass-through effects across the semiconductor supply chain.

Key economic data today includes the UK July CPI, the final Eurozone July CPI, and European Central Bank President Christine Lagarde’s remarks at the World Economic Forum, all of which could influence market expectations for the trajectory of global monetary policy.