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Asia shares slide, yields climb as Gulf war rages
As the United States and Iran exchanged escalating threat, and Israel planned "weeks" of more fighting, oil prices went on another roller-coaster. Iran warned on Sunday that it would attack?the water and energy systems of its Gulf neighbors if the?U.S. President Donald Trump has followed through on his threat to strike Iran's power grid within 48 hours. This effectively ends any hope for an early conclusion to the war which is now in its fourth weeks. Trump warned Iran that it had only two days to open up the Strait of Hormuz. The Strait is currently closed for all vessels and there are few prospects of naval protection. Nikkei, the Japanese stock exchange, fell by 3.8%. This brings March's losses to more than 13%. South Korea's stock market fell 5.2% for a total of 12% in one month. The MSCI broadest Asia-Pacific index outside Japan fell 2.5% while the?Chinese blue chip index dropped 1.9%. Brent crude oil prices were once again volatile, with Brent closing at $112.62 per barrel and up 55% on the month. U.S. crude rose 0.8% to $99.98. The U.S. has allowed Iranian and Russian oil from tankers to be sold in the near-term, but the risk of shortages over the longer term is pushing futures prices down. Brent for September, for example, was up $1 to $92.90, suggesting that high prices are here to stay. Shane Oliver is the head of investment strategy for fund manager AMP. He said that oil prices could rise to $150 a barrel in upcoming weeks. "And because of the destruction to energy infrastructure, it will be longer before supply returns to normal." It's worth noting, too, that previous oil shocks were spread out over many months as the full impact of rising oil prices became more apparent - about four months in 1973 and one year in 1979." Analysts from HSBC reported that Singapore jet fuel prices were up 175% in this year, reaching a record high. Asian liquefied gas was also up 130%. Bunker fuel, which is used to transport goods by ship, has blown out and increased the cost. Fertiliser prices are also on the rise. Fatih Birol, the head of the International Energy Agency, warned that the crisis is "very severe", and worse than both oil shocks in the 1970s combined. SEND OFF RATE CUTTINGS In Europe, EUROSTOXX50 futures and DAX Futures both fell 1.2% while FTSE futures dropped 0.8%. S&P 500 Futures on Wall Street fell 0.2% while Nasdaq Futures dropped 0.3%. Energy inflation has caused markets to abandon their hopes of further monetary ease globally, and instead price in rate increases across the majority of developed nations. Futures have erased expectations of?50 basis point easing by the Federal Reserve in this year. There is even a slight chance that the next move will be upward. The hawkish sea change has caused bonds to fall and yields to rise, increasing borrowing costs for governments who are already facing deficits and debt. While the rise in yields has made equity valuations look more stretched, the prospect of higher costs as well as softer consumer demand have clouded corporate profit outlooks. Last week, bond yields increased by double digits around the world due to the energy shock and pressure on fiscal budgets caused by higher defense spending. The yield on ten-year U.S. Treasury bonds has reached a high of 4.415% after a steady climb of 44 basis points. As a result of the increased volatility on the markets, the U.S. Dollar has become a more reliable store of 'liquidity. The U.S. also is a net exporter of energy, giving it a comparative advantage over Europe and most of Asia which are net importers. The euro fell a little to $1.1545 but was still a long way off major supports of $1.1409 or $1.1392. Investors are wary of Japan intervening if the dollar breaks 160.00. Gold fell 2.6% on the commodity market to $4,371 per ounce, as investors bet on rising interest rates worldwide. (Reporting and editing by Lincoln Feast; reporting by Wayne Cole)
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Grain prices in Chicago are rising as investors assess the impact of US-Iran War
Chicago soybean futures rose on Monday, as investors considered?U.S. Iranian threats of targeting energy facilities could escalate the war, adding further pressure on the global commodities markets. Futures for wheat and corn edged higher. As of 0340 GMT, the most active soybean contract at?the Chicago Board of Trade (CBOT), was up 0.34% to $11.65-1/2 per bushel. CBOT corn rose 0.8% and wheat gained 1.1%. Iran has warned that it will strike water and energy infrastructure in the Gulf region if U.S. president Donald Trump follows through with his threat to attack Iran's?electricity network. U.S. president Donald Trump threatened on Saturday to "obliterate Iran's" power plants if Tehran didn't reopen the Strait of Hormuz in 48 hours. This was a significant step up from the day before when he spoke about "winding down" the war. Oil markets opened choppy early in Asia trading due to the prospect of tit for tat attacks on civilian infrastructure. The price of grains and oilseeds has closely tracked the fluctuations in crude oil during the U.S. Israel war on Iran. This is due to the use of corn and soybean oil in biofuels, and the interest investors have shown in these crops as a hedge against inflation. Claire Adams, agricultural analyst at Bendigo Bank Agribusiness said that wheat futures firmed due to concerns about drought conditions in the US Plains. Vaisala, a weather forecaster, said last week the continued dry weather in the central and southern Plains will maintain low moisture levels for winter wheat during next 30-60 days. The Rosario grains exchange reported on Friday that Argentina is shipping grains out at a rapid pace, as record sunflower exports, and booming corn sales, help absorb one of Argentina's largest harvests in recent years. Local media in Brazil reported that China had eased the rules regarding the presence of weeds on?Brazilian soya bean cargoes. This was based on a document issued by the local government. China is not going to implement a ?zero-tolerancepolicy for weed contamination in shipments, ?according to the report. According to Patria AgroNegocios, Brazilian farmers harvested 66.79 percent of the soybeans expected for 2025/26, a lower percentage than the 73.84 percent seen this time last season, but still close to the five-year median of 66.96%.
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South Korean stocks fall 5% and the won reaches a 17-year low due to Mideast conflict
South Korean shares fell on Monday on the back of a geopolitical conflict that has intensified in the Middle East. The won hit a 17-year low. U.S. president Donald Trump and Iran have threatened to?escalate? their war by attacking oil facilities in the Gulf. This could lead to a worsening of regional tensions and increase concerns on global markets. The benchmark KOSPI dropped 289.24 points or 5% to 5,491.96 at 0131 GMT. This was despite a trading limit being activated earlier in the day. The won fell 0.3% to 1,509.4 dollars on the?onshore Settlement Platform, reaching its lowest level since February 2009. Huh Jaehwan, analyst at Eugene Investment & Securities said: "Hopes of a quick end to the war are fading." "We do not have to be pessimistic, because Asian countries enjoy a stronger position now than ever before due to their robust tech sectors. The government is also planning to increase its budget. Huh stated that the market has lost patience. Budget Minister nominee Park Hong Keun said Monday that the government will draft a supplementary buget as soon as possible. This comes a day after both the government and ruling party agreed to spend an extra 25 trillion won (16.58 billion dollars) in order to help those affected by the surging oil price. Shin Hyun Song, who was appointed to lead the Bank of Korea on Sunday, stated that he would pursue a "balanced policy" with inflation, financial stability, and growth all taken into consideration. Only 74 of the 926 stocks traded on the stock exchange advanced, while 834 fell. Among the index heavyweights chipmaker Samsung Electronics dropped 4.81%, and SK Hynix fell 6.06%. The index fell by 1.8 trillion won as foreigners led the way, followed by institutional investors. KOSPI, a stock that was on a 'world-beating artificial intelligence-driven rally before the war began, has dropped 12% so far this month. The KOSPI is still up by 30% so far this year. The benchmark 10-year yield in the country jumped 14.4 basis points, to 3.802%. This is the highest level since November 2023.
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Saudi Aramco reduces oil supply to Asia in April for the second consecutive month
Saudi Aramco has cut 'crude oil supply' to Asian buyers in April for a second month,>>,>>,>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>?two sources?knowing the situation? said on Monday. This is after the U.S./Israeli war against Iran disrupted the trade via the Strait of Hormuz. Sources said that the producer will only supply 'Arab Light crude from the Red Sea port of Yanbu in April to customers on a term basis. This is to limit supplies to Asian refineries and to cap their output. Aramco couldn't be reached immediately for comment outside office hours. Kpler data shows that Saudi Arabia exported 4.355 millions barrels of crude per day so far in March. This is down from the 7.108 million barrels per days in February. In March, the producer will load record amounts of crude via Yanbu to offset the disruption in the Strait of Hormuz. Sinopec, China's largest refiner, is expected to load 24 million barrels of Saudi oil from Yanbu during March. On Thursday, oil loadings at the Yanbu port were briefly interrupted after a drone crashed into Saudi Aramco SAMREF refinery.
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Russell: The price of crude oil makes Trump TACO less likely to trade:
The crude oil markets still price in a resolution of the Middle East conflict that will result in the full opening of the Strait of Hormuz. In pricing this outcome, the market actually makes it more likely that the narrow waterway which serves as a channel for as much as 20 percent of the world’s oil supply remains closed. The market still expects U.S. president Donald Trump to deliver TACO - the acronym for Trump always?Chickens out. Trump can continue the conflict by maintaining the price of paper crude oil below the level that would allow for a return to normal flow from the Persian Gulf. This is because he believes the global market, which includes crude and refined products, is not yet in a crisis. It's a Catch-22. The paradoxical, no-win situation popularized by Joseph Heller in his 1961 novel with the same title. Brent crude futures, the global benchmark for oil prices, were trading at around $111.81 per barrel during early Asian trade Monday. They had risen by 54% from the $72.48 close on February 27, a day before Israel and the U.S. launched an air campaign against Iran. Brent reached a high of $139.13 per barrel when Russia invaded Ukraine on February 20, 2022. The Russian attack on Ukraine is different from the conflict currently raging in the Middle East because the Russian action did not result in significant losses of crude oil and refined products. China and India stepped in to fill the gap left by European countries' halting of purchases of Russian crude oil and products. The disruption was limited mainly to the rerouting and pricing. The situation today is quite different. Most of the 20,000,000 barrels of crude and refined products, which normally transit the Strait of Hormuz per day, are no longer available. Even with the increased flow of crude oil and refined products from the United Arab Emirate of Fujairah on the Gulf of Oman and Saudi Arabia's Yanbu Port in the Red Sea, the world is likely to lose at least 12,000,000 barrels of product per day. The International Energy Agency's moves to release their stockpiles, and the waiver of U.S. sanctions against Russian oil and Iranian crude in water are only temporary solutions that don't do much to solve the problem. HORMUZ is the only game The Strait of Hormuz is the single key to global supply. The longer it remains closed for most vessel traffic, the more strain will be put on the world's supplies. Singapore jet fuel prices are already showing the strain in Asia. The price of oil has more than doubled from the low of $93.45 per barrel on February 27. The highest price of jet fuel was $173.69 per barrel during the price spike after Moscow's invasion of Ukraine. This shows that physical traders did not perceive the same risk as the current war with Iran. The market must ask itself how high crude oil futures will have to go before Trump is forced to deliver on the TACO deal, instead of the current mixed message word salad. Trump has, in recent weeks, veered from claiming that the conflict would be over soon to threatening "obliteration" of Iran's energy installations if the Strait of Hormuz was not reopened. This move and the likely Iranian attacks on energy infrastructure in the Gulf do not sound like the necessary de-escalation to control crude oil futures. It seems that the de-escalation of tensions and the re-opening strait are getting further apart with every passing day. The history shows that long-running, intractable conflict is usually resolved only when one side achieves a decisive victory in a war. This is unlikely to happen in the current conflict, or when most parties begin to align their interests for peace. Trump wants to end the conflict quickly to increase the chances that his Republican Party will win the November mid-term elections. But his ego also needs a victory even if only his domestic political base believes it. Israel is determined to eliminate Iran from the world as a serious threat. It does not seem to care if a severe recession occurs worldwide if they continue to wage war. Iran's authoritarian regime, which has achieved its first goal of survival, might believe that prolonging the conflict will give it more leverage to negotiate favorable terms for any settlement. Russia is probably laughing to the bank, and wants the war on indefinitely. China believes it has a large oil stockpile that will protect it from the worst effects. However, the longer the conflict continues, the more likely economic consequences for the heavily trade-dependent Chinese economy. Almost every nation in Asia, Africa and Europe wants the war to end quickly, as they fear the economic effects of a prolonged lack of crude oil from the Gulf. Fuel-importing nations are particularly at risk. Lack of alignment increases the likelihood of war continuing or even getting worse. The global economy is likely to be faced with a loss of at least 10% of its crude oil supply and refined products. The question is not about demand, but rather supply. The global economic impact of reducing demand by 10 million bpd is not evenly distributed. Regions like Asia and Africa will likely suffer more. Even in wealthy countries, governments often lack the fiscal power to combat an increase in energy prices and their accompanying economic downturn. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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Oil prices are choppy in Asia as the Gulf War escalates
As the United States and Iran escalated their threats, and Israel prepared for "weeks" of more fighting, oil prices went on a roller coaster ride. Iran warned on Sunday that it would "attack the energy and water networks of its Gulf neighbors" if 'U.S. Donald Trump has followed through on his threat to strike Iran's power grid within 48 hours. This effectively ends any hope for an early conclusion to the war which is now in its fourth year. Trump said on Sunday that Iran has 48 hours to reopen the Strait of Hormuz. The Strait is currently closed to most ships and there are few prospects of naval protection. In early trading, the Australian and New Zealand stock markets were down by 1.7% and 1.1% respectively. Japan's Nikkei Futures were trading at 50,850, a decline from Friday's cash close of 53372. S&P futures on Wall Street fell 0.1% while Nasdaq lost 0.2%. Investors were weighing the?risks of the conflict and their impact on energy prices. Shane Oliver is the head of investment strategy for fund manager AMP. He said that oil prices could rise to $150 a barrel in upcoming weeks. "And because of the destruction to energy infrastructure, it will be longer before supply returns to normal." It's worth noting, too, that previous oil?shocks were spread out over several months as the full impact of rising oil prices became more apparent - about four months in 1973 and one year in 1979." Brent oil prices were choppy again in Asia, with gains made early quickly being lost. Brent is now down 0.3% to $111.82 per barrel but up 55% for the month. U.S. crude fell 0.2% to $98.01. Analysts from HSBC reported that Singapore jet fuel prices were up 175% in this year, reaching a record high. Asian liquefied gas was also up 130%. Bunker fuel, which is used to transport goods by ship, has blown out and increased the cost. Fertiliser prices are also on the rise. SEND OFF RATE CUTTINGS Markets had abandoned hopes of further monetary easing and shifted to pricing rate increases in most developed nations. Futures have erased expectations of 50 basis points easing by the Federal Reserve in this year. There is even a slight chance that the next move will be upwards. The 'hawkish sea-change' has caused bonds to fall and yields to rise, increasing borrowing costs for governments who are already facing deficits and debt. The outlook for corporate profit has been clouded by the prospect of higher costs and weaker consumer demand, while the rise in yields has made equity valuations appear ever more stretched. Last week, bond yields increased by double digits across the globe due to the energy shock and pressures on fiscal budgets caused by higher defense spending. The yield on ten-year U.S. Treasury bonds is now 4.3856%. It has risen 42 basis points since the start of World War II. As a result of the increased volatility on the markets, the U.S. Dollar has become a more liquid store. The U.S. also has a significant energy exporter status, which gives it an advantage relative to Europe and Asia, both of whom are net importers. Investors were wary of Japan intervening if the dollar broke 160.00. The euro was slightly lower at $1.1545 and threatened to breach major supports at $1.1409 or $1.1392. On the commodity markets, gold rose 0.4% to $4,511 per ounce after losing ground last week, as investors bet on rising interest rates worldwide. (Reporting and editing by Lincoln Feast; Reporting by Wayne Cole)
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Slovenian parliamentary elections: Liberal and populist parties tied
According to the preliminary results from 'the state election commission', based on?the most votes?counted?, the right-leaning Slovenian Democratic Party and liberal Freedom Movement were tied at Sunday's parliamentary elections in Slovenia. Even with their existing coalition partners, neither party appeared likely to win the 46 seats required for a majority of the 90-seat Parliament. This makes smaller parties who cross the 4% threshold potentially kingmakers. SDS won 28 seats. Based on 99.45% counted votes, GS was in a close race with SDS. With the support of the other parties, GS, led by the incumbent Prime Minister Robert Golob, would have 40 MPs, while SDS, headed by populist former prime minister Janez Jansa would have 43. Golob told his fans that they had all put their trust in GS, regardless of what they believed. "We all deserve to have a better future, and with this mandate I can say that we will do all that we can to improve that future for all of our citizens." Jansa who was running for his 'fourth term' as premier accused the electoral commission of manipulating the counting. He said that his monitoring team had 'noticed a discrepancy in 50,000 votes for the SDS. He told local TV that if they organized themselves properly, he would recount all votes from every polling station. Aljaz Pengov Bitenc, a political analyst, doubts the formation of a stable government but believes that Golob has a stronger position to negotiate with a wider range of parties than Jansa. He said: "I anticipate a very long negotiation of a coalition because it will be difficult to hammer out the priorities. It will take a lot of political wisdom, patience and experience." DETERMINING SLOVENIA’S FUTURE PATH Both camps have stated that the election will determine Slovenia's future. Golob has pursued a liberal pro-European democracy focused on social reforms. Jansa, meanwhile, wants to cut funding for welfare, NGOs and media and introduce tax breaks. Golob aligned Slovenian Foreign Policy with European countries that support an independent Palestinian State, while Jansa would change the country's foreign alignment. Jansa is an ally of Hungarian Nationalist Prime Minister Viktor Orban, and a supporter of U.S. president Donald Trump. This month, the election campaign was sparked by covert videos published on an anonymous website that purportedly exposed government corruption. In a report published this week, it was claimed that Jansa had met with officials from the Israeli spy firm Black Cube. LinkedIn said in 2023 that Black Cube was responsible for a campaign of hidden cameras that targeted journalists and activists in the run-up to Hungary’s 2022 election.
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Starmer, UK's Starmer, calls for an emergency meeting to discuss the economy as Iran war threats mount
The British government announced that Prime Minister Keir starmer will chair an urgent meeting on the economic impact of the war in Iran, on Monday. Finance minister Rachel Reeves, and Bank of England Governor Andrew Bailey are expected to attend. Investors should prepare for another turbulent?week on the financial markets, after Iran warned that it would 'hit the energy and water system?of its Gulf neighbours' if U.S. president Donald Trump followed through on his threat to strike Iran’s electricity grid. The British are watching this situation with particular concern. The high level of inflation, the country's dependence on natural gas imports and its stretched public finances has caused government bonds to fall more than their international counterparts. The British Finance Ministry said that the meeting, dubbed "COBRA", on Monday will cover the following topics: the economic impact of this crisis on businesses and families, energy security and the resilience and supply chain of industries. Starmer, Reeves and Bailey will also attend the event as well as Foreign Secretary Yvette 'Cooper and Energy Minister Ed Miliband. Reeves said that it was too early to predict the impact of war on Britain's economy. He also resisted calls for cost-of-living increases for households and instead suggested more targeted assistance. INFLATION ?SET TO SHOOT HIGHER Energy price shock could push Britain's rate of inflation back up to 5% this year, or even higher. Reeves' efforts to fix the public finances could be derailed if the surge in oil and gas prices continues and major measures of support are needed, which may lead to further tax increases this year. Last week, the Government launched a 53-million-pound package to help homes who use heating oil for warmth. The bond market has become more uneasy as a result of the increased pressure to take wider measures. For the first time in almost two decades, the cost of borrowing 10-year British government bonds surpassed 5% on Friday. The majority of the losses were confined to short term gilts up until last week, which are largely based on interest rate expectations. The bets on what the BoE will do next have changed dramatically. They are now heavily skewed towards interest rate hikes, and away from the expected cuts until the end of World War II. The central bank announced last week that it is ready to take action to maintain inflation at its 2% target. Some policymakers suggested that borrowing costs could be increased, but Bailey said it was still too early to predict that rates will have to rise. The sale of long-term bonds and short-term debt indicates that investors have begun to 'price in Britain's fiscal vulnerabilities due to the energy price shock. Neil Wilson, UK Investor Strategist at Saxo Markets London said: "The developments over the weekend indicate that we are entering a very dangerous phase of financial markets." The move in bond rates last week was significant and added to the stress on financial markets. The markets are pricing in a central-bank response."
As the Gulf War escalates, Asia's yields are rising.
As the United States and Iran exchanged escalating threat, and Israel planned "weeks" of more fighting, oil prices went on another roller-coaster.
Iran announced on Sunday that it would attack the 'energy' and water systems of its Gulf neighbors if U.S. president Donald Trump carried out his threat to strike Iran’s electricity grid within 48 hours. This ended any hope for an early conclusion to the war which is now in its 4th week. Trump said Iran only had 48 hours before it would have to reopen the Strait of Hormuz. The Strait is currently closed to most ships and has little naval protection.
Nikkei, the Japanese stock market index, fell 3.9%. This brings March's losses to more than 13%. South Korea's stock market fell?4.5% for a total of 12% in one month. The broadest MSCI index of Asia-Pacific stocks outside Japan dropped 1.2%.
The oil prices are again volatile, with gains quickly fading away. Brent is down by 0.2% to $111.90 per barrel but has still risen 55% in the last month. U.S. crude oil was almost flat at $98.35.
Shane Oliver is the head of investment strategy for fund manager AMP. He said that "the war could continue for many more weeks?yet" and oil prices would rise to $150 a barrel. "And the constant destruction of energy infrastructure will mean it will take longer to return supply to normal."
It's worth noting, too, that previous oil shocks were spread out over a long period of time as the full impact became apparent. In 1973 it took about four months and in 1979 an entire year.
Analysts from HSBC reported that Singapore jet fuel prices were up 175% in this year, reaching a record high. Asian liquefied gas was also up 130%. Bunker fuel, which is used to transport goods by ship, has blown out and increased the cost. Fertiliser prices are also on the rise.
SEND OFF RATE CUTTINGS
EUROSTOXX50 futures and DAX Futures fell 1.2% in Europe. S&P 500 Futures on Wall Street fell 0.1% while Nasdaq Futures dropped 0.2%.
Energy inflation has prompted markets to abandon their hopes of further monetary easing and instead price in rate increases across the majority of developed nations.
Futures have erased expectations of 50 basis points easing by the Federal Reserve in this year. There is even a slight chance that the next move will be upwards.
The hawkish "sea-change" has caused bonds to fall and yields to rise, increasing borrowing costs for governments who are already facing deficits and debt.
The prospect of higher costs and softer consumer demand have clouded corporate profit forecasts, while the rise in yields has made equity valuations appear ever more stretched.
Last week, bond yields increased by double digits across the globe due to the energy shock and pressure on fiscal budgets caused by higher defense spending.
The yield on ten-year U.S. Treasury bonds was at a high of 4.410% for the past eight months, after having risen by 44 basis points.
As a result of the increased volatility on the markets, the U.S. Dollar has become a more liquid store. The U.S. also is a net exporter of energy, giving it a comparative advantage over Europe and most of Asia who are net importers.
The euro was slightly lower at $1.1555, though still far from the major supports of $1.1409 or $1.1392.
Investors were wary of Japan intervening if the dollar broke 160.00.
On the commodity markets, gold rose 0.4% to $4,511 per ounce after losing ground last week, as investors bet on rising interest rates worldwide. (Reporting and editing by Lincoln Feast; Reporting by Wayne Cole)
(source: Reuters)