CNBC Daily Open: War by other means turns to armed conflict — again

Hello, this is Hui Jie writing to you from Singapore. Welcome to another edition of CNBC's Daily Open.

For the past couple of weeks, Washington had been signaling that it could wage war on Iran by other means. Then it returned to the original kind.

On Sunday, the U.S. struck Iranian rocket launchers on Larak Island, in its first publicly acknowledged attack on Iran since late-July, raising worries of renewed armed conflict.

Markets have more to contend with besides the latest escalation in the Middle East as Federal Reserve Chair Kevin Warsh is now indicating that interest rates may have to rise.

U.S. President Donald Trump had vowed "Economic Warfare and Isolation on an unprecedented scale," against Iran, signaling a shift from armed conflict to economic pressure. That shift was short-lived.

U.S. forces struck two Iranian rocket launchers on Larak Island on Sunday, with the Iran war set to enter its seventh month, and a return to military actions raising concerns of a protracted conflict.

Oil futures rose just over 1% early Monday in Asia trading, while U.S. stock futures and Asia markets fell.

Prospects of higher rates are also denting investors sentiment, after Federal Reserve Chairman Kevin Warsh signaled that a possible rate hike was on the table, warning that inflation was still above target.

That stance puts him at odds with Trump, who has long pushed for lower rates and had criticized Warsh's predecessor Jerome Powell for not lowering rates fast enough.

Treasury Secretary Scott Bessent told Reuters Sunday stateside that he will encourage G20 member countries to re-examine ‌their terms of trade with China to get it to ​rebalance its economy away from exports toward more ​domestic consumption. "The world cannot have a China with a $1.2 trillion trade ​surplus," Bessent said.

On the corporate front, OpenAI has announced plans to wind down its contract allowing developers to access its models on code editor Cursor, which has been acquired by Elon Musk's SpaceX.

OpenAI said it was not confident SpaceX will use its technology within its terms of service, "based on our experience with Elon Musk's companies violating contracts."

Broadcaster RUV reported that 52.8% of voters rejected the government's push to reopen EU membership negotiations, while 47.2% voted in favor.

A majority "yes" vote would have led to a negotiated agreement being put to a second referendum for Icelanders to accept or reject.

—Azhar Sukri