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Investors weigh Middle East conflict as they increase European shares
Investors paused on Wednesday to re-energize themselves after a global stock market crash that sent the benchmark index plummeting more than a month ago amid fears of a prolonged and widened conflict in the Middle East. By 0810 GMT, the pan-European STOXX 600 index was up 0.6% to?607.62. Since Friday's record high, the index has lost nearly 5%. The travel and luxury stocks that were at the forefront of this sell-off were each up by more than 1%. The index was boosted by the technology and healthcare sectors. Vistry fell 22% after the UK homebuilder announced that Greg Fitzgerald, its CEO and chair, would be stepping down. The roles will then be separated upon his retirement. Israeli and U.S. Forces have been attacking targets in Iran since Saturday. This has prompted retaliatory attacks from?Tehran against U.S. Allies across the Gulf Region, including oil refineries and U.S. embassies. Brent Crude prices rose by nearly 2% despite a decline from their peaks following the?U.S. Donald Trump, the President of the United States, ordered an insurance guarantee to cover Gulf shipping. The Navy could accompany oil tankers along the 'Strait of Hormuz. The oil sector fell for a second session in a row, falling 0.6%. Adidas, among?others stocks, fell?6% after the results of the sports giant. The euro zone PMI is expected later today. Reporting by Avinash in Bengaluru, editing by Rashmi Aich
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Sources say that Japan and the US are looking to add nuclear energy project to their $550 billion investment package.
Two people familiar with the matter said on Wednesday that Japan and the United States were working together to include a nuclear power plant in the second round of deals as part of Japan's $550 billion?investment package? Sources say that the nuclear power project will include Westinghouse. It is intended to strengthen the energy supply chains of both countries, as the war in the Middle East has renewed concerns over energy security. There are several deals that have been discussed and could be announced by the Japanese Prime Minister Sanae Takayichi when she meets with?U.S. Sources who refused to be named said that President Donald Trump will visit Washington, DC on March 19. The matter is 'private. Tokyo is scrambling for deals to fulfill its investment commitments made in a U.S. Tariff Agreement. It has announced three projects worth $36 billion including a natural-gas power plant in Ohio. Sources said that a project to build a copper smelting facility and refinery is also under consideration. Ryosei?Akazawa, Japan's trade?minister, plans to travel to the United States to further the discussions. Two sources said that Howard Lutnick is scheduled to visit the U.S. Commerce Department on Thursday. In a joint factsheet the two governments released in October, Westinghouse was listed as one of around 20 companies that expressed an interest in Tokyo-financed projects. According to a fact sheet, the U.S. firm, owned by Cameco, Brookfield, and Brookfield, is planning to build small modular reactors and pressurized water?reactors worth up to $100 billion. It said that Japanese companies such as Mitsubishi Heavy Industries and Toshiba could potentially be involved. The U.S. government signed a deal worth $80 billion last year with Westinghouse for the construction of?nuclear power reactors. This was part of Trump's agenda to increase the domestic energy production as demand increases due to the expansion in artificial intelligence data centres. Falcon Copper is also considering building a $2? The fact sheet also stated that Falcon Copper was considering building a $2? A Japanese official from the industry ministry stated that the government was unsure of the outcome of the negotiations. Mitsubishi Heavy stated that 'nothing has been decided and it will assess the equipment supplied on a case by case basis. Toshiba refused to comment. IHI stated that it would examine details if any concrete talks were to emerge. Westinghouse or Falcon Copper were not available for comment after their normal business hours. (Reporting and editing by Kate Mayberry; Additional reporting and reporting by Jekaterina Glubkova, Nobuhiro KUBO and Jekaterina Kihara)
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Traders say that India's MRPL has declared force majeure for gasoline export cargoes in March and April.
Two traders said that India's Mangalore Refinery has declared force majeure for all gasoline exports due to the Middle East conflict, which has disrupted crude oil flows from the Gulf. Two traders who said they had received a notification from the company said that MRPL had invoked force majeure. This is a legal term that allows a business to invoke circumstances beyond their control in order to?not fulfill a contract' for its gasoline sales for March and April. The state-run ?refiner, which operates a 500,000-barrel-per-day refinery in the southern state of Karnataka, exports about ?40% of its refined fuel output. After U.S. and Israeli airstrikes on Iran, shipping through the Strait of Hormuz, which transports?around a quarter of the oil consumed worldwide, virtually ceased?after vessels were attacked by Iranians in the area, leaving the energy trade in chaos. MRPL didn't immediately respond to an email request for a statement. Unidentified source within the company confirmed that the "force majeure" had occurred. Indian refiners purchase about 40% of the crude oil they need from the Middle East. They also source from spot markets, and process domestic oil. A government source revealed on Tuesday that India is looking for alternative sources to import crude oil, LPG and LNG. MRPL?said that it was exploring the purchase of Venezuelan oil in January after the refiner halted its imports of Russian crude oil to comply with Western sanction. India has enough crude oil to meet the demand for 25 days. The government source said that refiners also hold enough gasoil and gasoline to last 25 days.
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Iron ore range bound ahead of the annual parliamentary meeting
Investors and traders were cautious on Wednesday as they awaited the annual parliamentary meeting of the world's second-largest country, which will begin March 5. The daytime trading of the most traded iron ore contract at China's Dalian Commodity Exchange closed up 0.4% to 752 yuan (US$108.73) per metric ton. As of 0700 GMT, the benchmark April iron ore traded on Singapore Exchange was down?0.26% to $98.75 per ton. Investors closely monitored?cues of China's macroeconomic and industrial policy trend in order to gauge?demand for steel and its components. Analysts expect Premier Li Qiang to announce, in his report, on the first day of this gathering (March 5) a?growth target?of 4.5-5% and to pledge to boost consumption as well as investment in high-tech industry. Beijing will also unveil its 15th five year plan, which outlines strategic goals and policies for the years 2026-2030. An official survey released on Wednesday showed that China's factory activity declined for the second consecutive time in February. Coking coal and coke, two other steelmaking ingredients, also moved in the same direction. The Shanghai Futures Exchange had mixed steel benchmarks. Rebar grew by 0.13%; hot-rolled coils were flat; wire rods dipped by 0.63%; and stainless steel slipped?0.04%. Analysts and traders have said that some Chinese steel exporters stopped making offers to Middle?East customers as the U.S.-Israeli conflict?with Iran chokes?shipping?throughthe Straits of Hormuz. $1 = 6.9161 Chinese Yuan (Reporting and editing by Amy Lv, Lewis Jackson and Ronojoy Zaumdar).
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Aluminum prices rise on fears of supply as the Iran conflict escalates
Aluminum prices continued to rise on Wednesday, as supply concerns grew after Norsk Hydro of Norway announced a controlled shut-down?in their aluminium joint venture in Qatar in the face of a growing war in the Middle East. Around 8% of global aluminum capacity is accounted for by the region. As the conflict spreads into neighbouring countries and Iran threatens to target ships trying to transit the Strait, supply concerns are becoming more real. The Shanghai Futures Exchange's most active aluminium contract closed the daytime trade 2.31% higher, at 24,795 Yuan ($3,585.11) per metric ton. As of 0700 GMT, the benchmark?aluminum for three months on the London Metal Exchange increased by 1.60% to $2,303 per ton. Norsk Hydro announced the Qatalum shut down on Tuesday, after its gas provider warned of an imminent supply halt. The?company announced that it has issued a notice of force majeure to its customers, as the curtailment is continuing. In a recent note, commodities strategist Ewa Manthey at ING said that the disruption had "hit a market?that?was already tight". "Prior the conflict, we had a 600kt deficit in our aluminium balance for 2026." China's cap on capacity, trade disruptions, and the impending shutdown of Mozal all contributed to the supply constraint, Manthey stated. He also added that the LME inventory drop, premium increases, and tightening between the LME Cash Contract and benchmark three-month contract were other factors. Even before the war, there was a shortage of supplies. Aluminium's gains were capped by a stronger dollar. The most active copper contract in Shanghai fell 0.73% to 101,660 yuan per ton. Meanwhile, the benchmark copper rose 0.58% to $13,030 per ton. Citi analysts warned that continued disruptions would continue to put pressure on macroeconomics and reduce demand for metals. The Federal Reserve also said that softer growth forecasts and declining expectations of interest rate cuts have contributed to the downward pressure on prices. On the SHFE, tin fell?5.17%, and nickel edged up 0.12%. $1 = 6.9161 Chinese yuan renminbi $1 = 6.9161 Chinese Yuan Renminbi (Reporting and editing by Lewis Jackson, Dylan Duan and Sonia Cheema).
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Mike Dolan, CEO of ROI-Gold, fumbles his lines in the Middle East:
In an alarming week dominated by a?Middle East conflict, the gold market made a bizarre move. Investors did not rush to buy gold but instead rushed for dollars, selling anything that had a speculative edge before the attacks last weekend. After the attacks on Iran Saturday, the initial demand for precious metals waned rapidly. On Tuesday there was a dramatic reversal with silver and gold both dropping by as much as 10 percent. One of the main reasons for the gold price's decline was the return of the dollar’s "safety" bid, which had seen the greenback rise this week despite the heavy losses in U.S. bonds and stocks. Public and private funds may have opted for dollar liquidity in the Middle East due to Iranian retaliatory attacks. The surge in oil and gas prices in dollars may have also prompted a demand for the world's reserves currency. The main reason for the rise in the dollar is likely to be the impact on major European and Asian economies of a prolonged energy supply disruption, and a price spike, compared with the relatively insulated U.S. A rising dollar can take the luster off gold. There are also other reasons why gold has been "invisible" this week. The first is the correlation between gold and the Swiss franc. Both have historically been the safest havens during stressful times, and both are bid up together - especially since others like Japan's yen or U.S. Treasuries were neutralised in recent years. The Swiss National Bank's extraordinary warning on Monday of an intervention to sell francs quickly reversed the gains the currency had made against the dollar and the euro. The unwinding of haven trading may have increased pressure on gold. And the first shall be last Investors who piled up gold in a speculative frenzy, one that nearly doubled its price and set new records over the last year, are cashing out their best-performing investments as risk and volatility increase. This would be akin to the abrupt reversal in the best performing stock market of the year. The benchmark Kospi index in South Korea fell by more than 7% Tuesday, as Seoul returned after a vacation to reverse some gains of nearly 50% for the year. Gold and ?silver were the second- and third-best-performing major markets of 2026 before the strikes, behind the blockbuster Kospi, while Japan's Nikkei - up about 15% before the weekend - has since dropped more than 4%. Many portfolios are looking to increase their cash and liquidity as volatility is on the rise and another energy shock could be brewing in the global economy. Gold hasn't yet been able to perform as a "haven" in this environment. This says a lot about how the recent rally and buying was influenced by the ongoing reversal after more than a decade-long dollar strength. According to?IMF's First Deputy Managing director Dan Katz, who spoke on Tuesday, this week's dollar behavior shows that its role as an international safe haven persists. The U.S. currency is still the "heart" of the global monetary system. Other reasons may still drive gold's rise. If its recent parabolic rise was fueled by doomsday stories about the dollar's imminent demise, this week's movements may prompt a change of heart. You're enjoying this "column"? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Sign up for Morning Bid U.S., my weekly newsletter. You can also listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Stocks plunge in Seoul as record sell-off leads to stock market rout
Investors dumped bets in the chip industry on Wednesday as they feared that a growing Middle East conflict would cause an oil shock, which could increase inflation and delay interest rate reductions. Asia is heavily dependent on the energy imports that are shipped through the nearly closed 'Strait of Hormuz'. This was evident in Seoul where the session ended with the stock market dropping 12%. It was the biggest drop ever recorded. Over the past two days, the benchmark lost over 18% of its worth while the currency fell to a low not seen in 17 years. Japan's Nikkei dropped 3.9%, and Taiwan stocks fell 4.3%. Investors fled from semiconductor makers which had been the hot bet of the past few months. This was likely to cover losses elsewhere and reduce risks. Charu Chanana is the chief investment strategist for Saxo, a Singapore-based brokerage. She said that "Asia’s selloff has become disorderly" because markets no longer treat this as an 'one week headline shock'. The "sell-what-you can" phase is spreading. S&P futures slid 0.6% lower, while European futures traded flat after an initial bounce. Goldman Sachs CEO David Solomon stated that he was surprised by the markets' "benign reaction" up to now. "There is a cumulative reaction to everything that has happened and it's much more harsh." In a speech he gave in Sydney, he stated that we had not seen the cumulative effect up to this point. He said: "I don't think the markets will be able to digest what happened in the short-term and medium-term for a few weeks. I cannot speculate on how this would unfold." Rate Cuts in Question Benchmark Brent crude futures are on the rise, up 13% in the past week to $82.08 per barrel. Prices have fallen since U.S. president Donald Trump announced an insurance guarantee for Gulf shipping. He also said that the Navy may accompany oil tankers as they pass through the Strait of Hormuz. Since Saturday, U.S. forces and Israeli forces have been pounding Iran. Iranian drones and rockets have also struck Gulf oil refineries as well as U.S. embassies located in Saudi Arabia and Kuwait. Damien Boey is a portfolio strategist with Wilson Asset Management, Sydney. He said: "Oil infrastructure appears to be under attack...?so we have to consider how long this will last." After an initial rally, bond markets are under pressure now as investors bet that higher oil prices would stoke inflation and delay rate reductions. The Federal Reserve is more likely to maintain rates in June, according to traders. "For the United States, this is very clearly inflationary...so, the market's reassessing if the Fed can deliver any rate reductions at all this year," Andrew Lilley said, chief rates strategy for Australian investment firm Barrenjoey. DASH FOR CASH Cash is the winner, as money market funds are flooded with flow from higher-risk bets. Gold and the Australian dollar were also hit over night as investors closed winning trades. In Asia, gold remained at $5,163 an ounce, but the Australian dollar dropped to just under 70 cents. Overnight, Wall Street indexes recovered from heavier losses. The S&P?500 ended 0.8% lower. Higher energy costs pushed the euro to $1.16. Gas prices in Europe have increased by?66% over the past two days. The energy crisis is also affecting coal prices. Australia's benchmark Newcastle rate rose almost 17% in the past week. "For the markets to find a bottom, we need to see signs of de-escalation or status quo on the front line, which would then shift the focus to fundamentals," Rupal Agarwal said, Asia quant strategy at Bernstein, in Singapore.
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UAE stock markets slide after reopening following a two-day suspension due to the Iran attacks
Dubai and Abu Dhabi stocks plunged on Wednesday after they reopened following a two-day suspension in response to Iran's unprecedented wave of missiles and drones?attacks against the Gulf nation. The closing of the market froze the trading of billions of dollars worth of listed assets, as investors awaited clarification on the'scale of damage caused by the weekend strikes which 'hit airports and ports in both emirates, along with residential areas. Dubai's main share index fell 4.7% on a broad basis, led by Emaar Properties, a blue-chip developer, who dropped 4.9%. Budget airliner Air Arabia also declined 5%. In Abu Dhabi the index dropped 3.6%. This was the biggest drop since May 2022. The country's largest lender, First Abu Dhabi Bank, lost 5%. Both exchanges have said that they will temporarily lower the price limit of securities to -5%. The Dubai Financial Services Authority (DFSA), in a'separate'statement, said Nasdaq Dubai will also re-start trading that day. The Abu Dhabi Securities Exchange (AdSE) has ordered all listed companies to assess their financial and operational exposure immediately, as well as promptly disclose any information that may influence investor decisions. (Reporting and editing by Sumana Naandy in Bengaluru, Ateeq Sharif in Bengaluru)
QUOTES - Asia stock crash deepens, as markets prepare for energy shock
Investors sold their chips on Wednesday as they feared that the Middle East conflict would cause an oil shock, which could fuel inflation and delay interest rate cuts.
The broadest MSCI index of Asia-Pacific stocks outside Japan dropped 4.2%. Seoul's KOSPI index fell more than 11%, triggering a circuit break. Japan's Nikkei Index and Taiwan's index both dropped more than 4 percent each.
Analysts' comments:
COMMENTS:
CHARU CHANANA CHIEF INVESTMENT STRATEGIST SAXO SINGAPORE
"Asia’s selloff has become disorderly, because markets are no longer treating it as a one-week headline shock. The current?pricing reflects the fact that this conflict could continue, and spillover risks are increasing rather than decreasing.
"The inflation channel is biting more. The market doesn't only reprice geopolitics, but also energy logistics, security premiums, and long-lasting inflation pressure. This is a more difficult backdrop for risk assets compared to a simple growth fear.
"Policy offsets are less credible when they're implemented in reality. Talk of escorting vessels or lowering energy costs does not solve the core problem if the transit of the Hormuz is in dispute and energy infrastructure is in danger.
"The'sell whatever you can' phase has spread: liquidity requirements are pulling precious metals down, which is less of a clean rotation than it is de-leveraging and margin driven selling across asset categories.
KENNETH GOH, DIRECTOR, PRIVATE WEALTH, UOB KAY HIAN SINGAPORE
"Uncertainty is driving this." Investors believe there is no endgame and, more importantly, there is no plan visible for an endgame. This is what has markets more uneasy than tariffs.
This is a very different situation from the global financial crises, when investors were running for the exits at all costs and holding as much cash as they could. We're now seeing a more deliberate shift in asset allocation towards cash and safe-haven assets.
Within that rotation, "some market participants also position in gold and look at commodities as a hedging."
TONY SYCAMORE MARKET ANALYST IG SYDNEY
"We are seeing portfolios de-risked... I feel that the Middle East is moving in a more uncertain way... It's now looking like a good moment to put money on the sidelines."
"At the beginning of the week, there was a sense, I believe, that this was going to be a short conflict.
"The pessimistic view, which is resonating stronger now, is that this could last for weeks, months or even years."
FRANCIS TAN CHIEF ASIA STRATEGIST INDOSUEZ MANAGEMENT SINGAPORE
The market is adjusting now to what if the conflict is going to last a little longer. The beta shock will be greater for those indexes with a high beta.
"(Clients) have asked about the impact on China." "People have asked, because China imports oil, how these things will impact, and translate towards the overall growth of the economy."
HIROYUKI UENO IS THE CHIEF STRATEGIST OF SUMITOMO MISTI TRUST ASSET MANAGEMENT IN TOKYO.
"Today's loss has erased the Nikkei gain since Prime Minister Sanae Takaichi won the national elections in early February by a wide margin.
Investors who purchased Japanese stocks following the election likely sold the shares during the recent selloffs.
"The Nikkei will be aiming for a low of 52,000 by the end of January, when Takaichi declared the snap elections. I see 52,000 as the Nikkei's defence line. Once it drops below that level, the index could 'keep falling.
CHRISTOPHER FORBES, DIRECTOR OF ASIA AND THE MIDDLE EAST AT CMC MARKETS
The KOSPI's two-day 15% collapse is a textbook example of momentum, and not a structural breakdown ....?when U.S. - Israeli operations virtually closed the Strait of?Hormuz there were no diversified offers to absorb the sales.
The order book disappeared. In just two sessions, foreign investors drew in $7 billion. The record hedge fund short book is the biggest catalyst for upside. Goldman Prime brokerage reported that shorts outnumbered longs by two to one in early February.
If tensions are eased quickly, then a violent squeeze may follow. Samsung and SK Hynix are healthy businesses.
RUPAL AGARWAL ASIA QUANT STRATEGIST, BERNSTEIN SINGAPORE
The impact on Asian markets was greater because Asian economies were more vulnerable to the Strait of Hormuz closing and because momentum trends in many parts of Asia, such as Korea, were very strong in the lead-up to war.
For markets to find a bottom, we need to see signs of de-escalation or a status quo. This could then shift the focus to fundamentals.
RADHIKA ROA, SENIOR ECONOMIST,?DBS BANK SINGAPORE
The ASEAN-6 countries' net oil trade balance (as a percentage of GDP) is most negative in Thailand, Malaysia and Vietnam, with price pressures being most significant in Thailand and the Philippines.
"Thailand and Singapore, although less strategically important, are the top LNG buyers in this region. However, they have a well-balanced supplier mix in Singapore, in particular.
"Much the region will likely be watching developments in the Middle East closely with fear." The regional central banks will not act in advance on policy and prefer to stay on hold." Reporting by Rae Wee in Singapore, Tom Westbrook in Tokyo, Roushni Nai in Bengaluru, and Kate Mayberry in London.
(source: Reuters)