Global markets fell on Monday as trade tensions between the US and Canada escalated and investors braced for fresh US sanctions on Iran. Talks between Washington and Ottawa collapsed on Friday, prompting the US to impose 50% tariffs on $20bn of Canadian goods and Canada to announce matching retaliatory measures, weakening the Canadian dollar and unsettling currency markets. Separately, Iran's rial hit a record low amid warnings from US Treasury Secretary Scott Bessent of an "economic D-day", while oil prices slipped as markets awaited details of the threatened sanctions.

The Canadian dollar dipped 0.2% to C$1.3798 per US dollar after Prime Minister Mark Carney said Canada was "walking away from a bad deal" and would impose 50% tariffs on US goods including wine, dairy and electronics from 8 September. Asian shares also fell, with Japan's Nikkei down nearly 0.7%, Hong Kong's Hang Seng dropping 1.9% and South Korea's Kospi tumbling 3.2%, while Brent crude lost 1.6% to $92.81 a barrel. Attention now turns to the Jackson Hole conference this week, where new Federal Reserve chair Kevin Warsh is due to speak amid anxiety over inflation and a sell-off in US government bonds.