Oil prices firmed modestly on Monday after US and Iranian forces carried out tit-for-tat attacks on vessels in the Strait of Hormuz over the weekend, keeping a geopolitical risk premium embedded in the market. The strait is one of the world's most important oil chokepoints, with roughly a fifth of globally traded petroleum passing through it, so even hints of disruption to shipping lanes tend to keep traders pricing in supply risk. Weekend reports said Iran's top security official, Mohsen Rezaei, stated that Tehran will declare a restricted zone near the strait and announce a new shipping route agreed with Oman in the coming days and weeks. In other oil news, OPEC kept its output quotas flat for October, leaving the group on its existing roadmap for the remainder of the year.

Gold dropped toward the USD 4,400 an ounce level, pressured by Friday's nonfarm payrolls report showing stronger-than-expected US jobs data, which strengthens the argument for the Federal Open Market Committee (FOMC) to raise rates next week. The dynamic is a familiar one for bullion: higher rates lift the opportunity cost of holding non-yielding assets, and hawkish repricing has historically weighed on the metal.

Japanese and South Korean shares advanced, driven by chipmakers on optimism around AI investment demand. Both the Kospi and the Nikkei gained, with Samsung Electronics and SK Hynix — two of the world's largest memory chipmakers — leading the advance in Seoul. The circulating narrative for Japan's rally — that calmer bond markets and a steadier yen had eased volatility and encouraged a shift to risk-on positioning — deserves caution, however, given that Wall Street actually fell on Friday on rising Fed rate hike odds, with only the semiconductor sector bucking the broader decline. Investors watching for follow-through will be looking at upcoming US inflation prints, which analysts have flagged as a key input into the Fed's September decision.

Hong Kong shares moved in the opposite direction, with the Hang Seng Index down more than 1% and the Hang Seng Tech Index off around 1.1%. Major foreign exchange markets were quiet, with only minor moves across the majors.

Traders should note that Monday is a US holiday. CME Globex opened as normal at its regular time on Sunday evening, but the Monday session will see an early halt around midday before markets reopen that evening for Tuesday's trade date. Thinned holiday liquidity can amplify price moves on any headline developments out of the Middle East.

Summary

• Oil prices firmed mildly after US and Iranian forces exchanged tit-for-tat attacks on vessels in the Strait of Hormuz over the weekend.
• Iran's top security official, Mohsen Rezaei, said Tehran will declare a restricted zone near Hormuz and announce a new Oman-agreed shipping route in the coming days and weeks.
• OPEC held its oil output quotas flat for October.
• Gold dropped to retest the USD 4,400/oz level after last week's stronger-than-expected US jobs data, which supports the case for a Fed rate hike this month.
• Japanese and South Korean stocks rose on chip demand optimism, though the stated rationale for Japan's gains sits uneasily against Friday's actual Wall Street losses outside the semiconductor sector.
• Hong Kong shares fell, with the Hang Seng down more than 1% and the Hang Seng Tech Index down around 1.1%.
• Major FX markets were quiet, with only minor moves across the majors.
• Monday's US Labor Day holiday will see CME Globex open as normal on Sunday evening, before an early halt around midday and a reopening that evening.

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