US forces destroy five Iranian oil tankers; Asia equities climb on AI hopes

Key points:

• The US Central Command reported that American forces destroyed five Iranian crude oil tankers in retaliation for an IRGC ballistic missile strike on a US aircraft carrier. That is an increase from the three tankers hit on September 5.
• Secretary of State Marco Rubio stated that Iran would keep losing tankers for each attempt to attack US naval ships.
• Iran launched a ballistic missile assault on a US base close to Al Azraq in Jordan. According to Jordan, its air defences intercepted 18 of the 20 missiles, while the remaining two landed in deserted areas with no injuries reported.
• Iran asserted it hit two US Navy destroyers and 18 vessels trying to cross the Strait of Hormuz. These claims have not been confirmed.
• The United States prohibited the import of various Canadian alcoholic drinks, motorcycles, and dairy items, taking effect on September 29, following Canada's retaliatory tariffs.
• The USD/CAD pair and wider foreign exchange markets are subdued, with traders pointing to the forthcoming US CPI data as the immediate focus.
• Asia-Pacific stocks mostly rose at the open, shrugging off a negative lead from Wall Street, where indexes declined after the long weekend due to climbing oil prices and the geopolitical tensions. South Korea's KOSPI outperformed, advancing 2% on optimism around artificial intelligence and chip stocks.
• China's August consumer price index increased 0.8% year on year and producer price index rose 3.8% year on year, both exceeding expectations and July figures. The National Bureau of Statistics attributed the rise to higher energy costs, although economists warned the bounce does not indicate a true revival in domestic demand.

The US Central Command stated that American forces destroyed five Iranian crude oil tankers overnight, which officials called a retaliation for an Iranian ballistic missile strike on a US aircraft carrier. That attack represents an escalation from the three tankers struck on September 5. Within a day of that earlier strike, Iran responded with its biggest single assault in the Strait of Hormuz since the conflict started, hitting six vessels, three of which were oil tankers.

Speaking to journalists while visiting Colombia, Secretary of State Marco Rubio said that Iran would keep losing tankers as long as it persisted in trying to attack US naval ships.

Iran then launched a ballistic missile attack on a US base in Jordan, as per an IRGC statement on state media, which also released video claiming to show the missile launches. Jordan reported that its air defences intercepted 18 of the 20 missiles fired, with the other two landing in unpopulated areas and no casualties — a less severe outcome than Iran's assertion of heavy damage.

In a separate development, the trade conflict between the US and Canada intensified. The US imposed a ban on importing a wide array of Canadian alcoholic drinks, motorcycles, and dairy products, with the restrictions starting on September 29. The bans, posted on the White House website, came after Canada's retaliatory tariffs on US goods took effect after midnight on Tuesday. So far, currency markets have been subdued, with USD/CAD barely moving and broader FX markets generally calm as traders await the upcoming US CPI release for the next major catalyst.

Asia-Pacific stock markets mostly ignored a soft lead from Wall Street, where all major US indexes declined upon returning from the long weekend, weighed down by higher oil prices, speculation of a Federal Reserve rate hike, and the continuing geopolitical tensions. The standout in the region was South Korea's KOSPI, which climbed 2% driven by optimism over artificial intelligence and gains in chip stocks.

On the economic data side, China's August inflation numbers exceeded expectations on both fronts. The consumer price index increased 0.8% year on year and the producer price index rose 3.8% year on year, both topping forecasts and July figures. The National Bureau of Statistics credited the rebound to higher energy costs. However, economists have warned that the improvement stems from supply-side pressures rather than a real recovery in domestic demand, as China's economy continues to grapple with a housing-driven downturn in consumer spending and confidence.