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Hong Kong protests descend into violence again, the U.K. steps in to lower Iran oil tensions, and Japan’s Prime Minister Shinzo Abe falls short of a supermajority despite election win. Here’s what’s moving markets.

Hong Kong Unrest

Hong Kong police fired tear gas to disperse demonstrators who had earlier surrounded China’s main local government office, as an otherwise peaceful protest march turned tense late Sunday.  Clashes broke out as police attempted to clear the remnants of the latest mass rally against the government and its now-suspended effort to allow extraditions to mainland China.  The march marked the sixth straight week of anti-government rallies that have put increasing pressure on the financial hub’s administration. Organizers said 430,000 people turned out for Sunday’s march, while the police said 138,000 attended at its peak. Meanwhile, fights also broke out away from the city center, in a suburb close to Shenzhen along the mainland Chinese border. 

Iran Oil Tensions 

The U.K. sought to lower tensions after Iran seized a British oil tanker in the Strait of Hormuz on Friday, an incident that increased friction in one of the world’s critical energy chokepoints. The U.K. demanded the immediate release of the Stena Impero and on Saturday summoned Iran’s charge d’affaires, Mohsen Omidzamani, in London. While the government threatened Iran with “serious consequences” and advised U.K. ships to avoid the area, ministers on Sunday sought to dial down the rhetoric.

Markets Open 

Stocks in Asia looked set to kick off the week on the backfoot following declines in the U.S. session Friday as traders wound back bets on a more aggressive Federal Reserve policy move. Oil remains in focus during mounting tension in the Persian Gulf. Events to watch out for this week: earnings season rolls on with companies including Amazon.com, Alphabet, Unilever, Caterpillar, Coca-Cola, McDonald’s and Boeing; U.K. Prime Minister Theresa May’s successor will be announced on Tuesday; and the European Central Bank will deliver a policy decision Thursday. 

Japan’s Election

Japanese Prime Minister Shinzo Abe claimed victory in Sunday’s upper house election while falling short of securing a supermajority to quickly push through his plans to make the first revisions to the country’s pacifist constitution. Abe wants to add wording that makes explicit the legality of Japan’s Self-Defense Forces to the war-renouncing Article 9 of the constitution — though this idea divides the electorate. The document has remained unchanged since it was enacted in the aftermath of World War II.  Abe and other proponents of constitutional change fell short of the 85 seats that would have given them a two-thirds majority needed to send any proposed constitutional revision to a national referendum, NHK said.

Seeking Tariff Exemptions

Some Chinese companies are applying for tariff exemptions as they make inquiries about buying U.S. agricultural products, more than a week after President Donald Trump complained that China hasn’t increased its purchases of American farm products. China and the U.S. are implementing the agreement reached by Trump and President Xi Jinping when they met in Japan last month, the report said. There are still deep differences between the two nations, with U.S. Commerce Secretary Wilbur Ross cautioning the talks would be a “long, involved process.”

What We’ve Been Reading

This is what’s caught our eye over the weekend. 

• Taiwan’s stocks offer hefty yield but global investors ditch them anyway.
• The Fed may cut rates later this month. 
• Philippine president Duterte wants to revive the death penalty.
• Why bond yields may go up as odds of  Singapore easing rise. 
• Nissan bets the humble sedan is the next big thing. 
• “Avengers: Endgame” beats Avatar to become highest-grossing film of all time.

To contact the editor responsible for this story: Kristine Servando at kservando@bloomberg.net

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