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US troops would be at risk if they took Kharg Island. Drones, mines and other dangers
Donald Trump is weighing up whether to use ground troops to take Iran's strategic oil center of?Kharg Island. Analysts say that this operation could be accomplished quickly but would leave the?U.S. The war will be prolonged and troops put in danger. Where is Kharg Island and why? Kharg Island is located 16 miles (26 kms) off the coast of Iran in the northern end of the Gulf. It's about 483 kilometers (483 miles) north of the Strait of Hormuz. The island is located in water that is deep enough for tankers to dock, even if they are too big to reach the shallow waters of the Iranian coast. Seizing the island would allow the United States to disrupt Iran's energy industry and put enormous pressure on Tehran. Iran is the Organization of Petroleum Exporting Countries' third-largest oil producer. What is the current state of play? U.S. forces conducted strikes against Kharg mid-March. Trump said that they had "totally destroyed" all military targets in Kharg and suggested they would target the oil infrastructure next. Officials from the United States have informed the administration that they are weighing up whether or not to "send ground forces" to the island. Sources say that the Pentagon plans to send thousands of airborne troops to the region by the end of this month to give Trump more options in case he decides to launch a ground attack. DRONES AND MINES The U.S. could seize the island relatively quickly. However, this would not necessarily mean that Trump's war is over in a hurry, especially given how unpopular it is at home, ahead of the midterm elections. The Foundation for Defense of Democracies' Ryan Brobst, and Cameron McMillan wrote that a seizure or occupation of Kharg Island would be more likely to escalate and prolong the war rather than to bring about a decisive victory. The U.S. military would be subjected to missile and drone attacks. This could include small but deadly "first-person-view drones", which are already being used by millions of Ukrainians. They said that if the Iranian regime were to launch successful attacks, they would release online videos showing the deaths of American soldiers as propaganda. Analysts say that Trump also hopes to gain leverage by gaining control of 'Kharg Island', which would force Iran to reopen the Strait of Hormuz. Tehran may choose to deploy more mines, including?floating?mines, to disrupt shipping in the area, as the conflict has already caused significant disruptions. TROOPS NEED BACKUP Joseph Votel, former commander of U.S. Central Command told TWZ.com that although only 800 to '1,000 troops would be required on Kharg Island but that they would also need logistical support and protection. Votel stated that the troops will be vulnerable and he doubted if capturing the island will provide any tactical advantage. It would seem "a bit odd" to do so. Votel added that they could do it, if necessary. (Reporting and editing by Andy Sullivan, Sonali Paul and Andy Sullivan; reporting by David Brunnstrom and Idrees Al and Phil Stewart)
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Oil shock, war, and uncertainty: McGeever: Time to increase US equity outlook
It might seem odd to be more bullish about stocks at a time when the U.S. economy is masked by a fog of war, and oil costs $100 per barrel. From a valuation perspective, the case is compelling. Barclays strategists outlined this?this past week, when they increased their S&P500 price?and earning forecasts. They are not the only bulls. They argue that corporate America won't be able to escape the economic impact of the Iran war or energy shock. However, it is still in a relatively good position. Take technology, the engine that has driven Wall Street's recent boom. Recent concerns that firms overspend on artificial intelligence have caused the market to sputter. Concerns about AI disruption has also roiled software company shares. The "Big Tech' selloff was pretty large. Roundhill's "Magnificent 7" ETF is down by 10%, which is three times more than the S&P 500. The tech sector, measured by the 12-month forward price/earnings rate, is now cheaper than it was during the 'Liberation Day' turmoil of a year earlier. This multiple hovers around 21, which is the lowest it has been in three years, and down by a third since last October. This is a remarkable turnaround of a key sector in a short period of time. The valuation premium that technology enjoyed in the past over the stock market is almost gone and now the smallest it has been in seven years. According to Jefferies equity strategists, a narrower measure of this premium - "Mag Six" over the S&P 500 – is the smallest it has been since 2008-09. The Re-Rating Game It is reasonable to argue that a "sweeping reset" was long overdue, as tech stocks had become far too costly. The current valuations are simply returning to their long-term mean. It's not just that tech is cheaper, but it looks cheap compared to the earnings forecasts of these companies. The LSEG's latest consensus estimate of tech earnings growth for calendar year 2026 stands at 42.5%. This is up from 30.8% in January and almost double the previous six-month estimate. Barclays strategists said this week that they believe the U.S. will continue to grow faster than other major economies, and technology is a growth engine with a long-term outlook. The S&P 500's earnings per share for this year were raised to $321, up from $305. They also increased the price target of the index to 7650, up from 7400. This would mean gains of about 16% since Wednesday's closing. They added, "We are incrementally optimistic about U.S. stocks. However, the road is likely to remain bumpy until we turn a corner." OVERWEIGHT AND SEE It's notable that U.S. consensus earnings estimates have been steadily rising over the past two months, while the S&P 500 continues to fall. Does this indicate an unjustifiably positive outlook for U.S. corporations, or a market overreacting to the external environment? It looks as if it might be the former. Wall Street has performed better than its global peers since the Middle East war broke out four weeks ago. This is partly because of the relative strength in the U.S. for growth, technology, earnings and energy. This situation is unlikely to drastically change in the near future. In their outlook for the second quarter, HSBC Private bank analysts stated that they remain "overweight on U.S. equities" due to a "resilient growth," solid corporate earnings, and continued innovation." The fear of rising U.S. inflation - which is currently at 3% and climbing - shouldn't be a deterrent for America Inc., as higher prices should increase nominal earnings in particular in sectors that have strong pricing power. Holding an over-weight position in any equity market at this time is risky, but Wall Street may be the safest place to do so. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Raychaudhuri: The South Korean stock market is cheaper because of the war in Iran, not weaker.
South Korea's stock market has become Asia's most volatile due to the Iran war. Fears of massive value destruction are probably unfounded, but the panic is real. The benchmark KOSPI index dropped over 18% in the two days following the start of the conflict on February 28. This was its worst ever daily drop. The next day, it recovered almost 10%. The market has been struggling with volatility for more than three weeks. The 'KOSPI' is partly to blame for its own success. It had risen sharply in the year before the conflict began, and was up more than 100 percent over the previous year. Investors faced with uncertainty and the need for cash often sold their investments. It is not surprising that the most liquid Korean shares in technology, chemicals, industrials and consumer discretionary stocks were the hardest hit. Conflict also weakened the outlook of some Korean companies, particularly after Iran closed the Strait of Hormuz. This narrow waterway was once used by roughly 20% of world energy to travel. Korea International Trade Association shows that 70% of the crude oil and 30% of the gas Korea will receive in 2025 from the Middle East transited through the Strait. According to the International Energy Agency, Korea's energy mix is heavily skewed towards fossil fuels. 37% of its oil, 22% of coal, and 20% of natural gas are derived from Middle East. On Tuesday, South Korean President Lee Jae Myung?called on a nationwide campaign to save energy. He asked the top 50 oil-consuming companies to reduce their use. It is difficult to ignore the broad risk. A prolonged disruption in energy would increase the cost of inputs, fuel inflation, and squeeze margins for corporations. Since the start of the war, the Korean won has weakened sharply, adding to the pressure. This could trigger capital outflows. Even with all the risks, some of the strengths that propelled Korean stocks before the war are still intact and may reappear in the minds of investors once the conflict is over. Earnings boom endures The outlook for earnings of Korean stocks remains positive despite wartime concerns. Korea's consensus earnings per share (EPS) estimate has risen the most among the major Asian markets in the past year. These have risen despite the Middle East conflict. This shows that analysts are still bullish about the main drivers for profit growth despite concerns over energy shortages. The majority of upgrades have been driven by the technology sector, primarily semiconductors. This is because the artificial intelligence revolution has not slowed down. Utility companies, energy and financial sectors have all made significant contributions, as well as?defence-exporters. The geopolitical conflicts should continue to be a support for the latter. It is even more striking that, after a 40% rise in Korean stocks since late October, KOSPI's price-to earnings (P/E), based on FactSet estimates, has declined by 28%. The forecasts for earnings-per-share have increased by 80% while the share price has lagged. This results in a market which looks cheaper based on future earnings, even after a good run. This dispels the myth that Korean stocks have become more costly since last year's rally. They haven't. UNPACKING MISTAKES A second myth about Korean stocks that is often heard is that the market has become "crowded." Samsung Electronics, SK Hynix and other major players in the global market for memory did seem overbought up until the recent market selloff. However, the broader stock market tells a very different story. From November to March 25, foreign investors sold $36 billion in Korean stocks, with the sales starting long before the conflict. Since January 2020, foreigners sold $48 billion worth of Korean stocks, leaving them with a negative net asset value. Thirdly, a third misconception is that investing in Korea means betting on the giant semiconductor companies. Even though AI infrastructure hardware remains the clear leader, Korean prowess has also been well established in defence, shipbuilding and heavy engineering as well as automobiles, cosmetics retail, ecommerce, entertainment, and base metals. FactSet consensus predicts that most of these sectors will grow their earnings by over 20% in the next two-year period. In many cases they are also attractively priced, with P/E multipliers that are significantly lower than the forecasted?earnings increase. One caveat is in order. If war-related disruptions continue, energy-intensive sectors such as chemicals and heavy engineering could see their earnings decline. GOVERNANCE & VOLATILITY The strong performance of Korea's equity market over the last year was also boosted by the corporate governance reforms, notably Seoul's Value Up programme, which aims to?boost shareholders rights. The government will need to reduce retail speculation to bring down volatility. While the progress made on this front is positive, it may be necessary to curtail corporate governance reform. Retail traders make up about a third of the daily turnover at Korea Exchange and use derivatives that are leveraged, which magnifies swings both ways. Regulators are taking steps to curb speculative trading and controversial practices such as illegal short-selling. The recent rise in technology stocks where leveraged positions were the most intense, however, indicates that more needs to be done. The war's course is uncertain. A prolonged energy shock may have a negative impact on Korea's economy. When 'zooming in' on Korean equities current fundamentals, and foreign ownership's low exposure, there are plenty of reasons to believe that the war could be just a pause in Korea rally. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn, X and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Trump announces a pause in the attacks on Iran's nuclear energy plants
U.S. president Donald Trump announced on Thursday that he would pause attacks on Iran's energy plants for 10 more days, at the request of the Iranian government. He also said that talks with Tehran are going "very smoothly." "As per Iranian government request... "I am pausing the period for Energy Plant destruction by 10 days to Monday, April 6th, 2026 at 8 PM Eastern Time," Trump stated in a Truth Social post. He said that "talks are ongoing, and, despite false statements made by Fake News Media and others, they're going very well." "I gave them a 10-day period." Trump told Fox News "The Five" that they asked for seven days. Trump told Fox News that he believes the U.S. won the Iran War. Trump has offered a variety of goals and timelines for the Iran War, from overthrowing Iran’s government to destroying Iran’s military and missile capability. Trump said, "In a sense, we've already won." Trump said Iran had to make a "deal" or face a continuing onslaught. The U.S., Israel and other countries attacked Iran on February 28, 2008. Tehran responded with its own 'attacks' on Israel and Gulf States that had U.S. base. The joint U.S. and Israeli strikes on?Iran, as well as Israeli attacks in Lebanon 'have killed thousands. The war has also risen oil prices and shook global markets. Reporting by Bhargav Asharya, Kanishka Sing and Jasper Ward. Editing by David Ljunggren & Bill Berkrot
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Mexican Navy says that a petroleum tanker and natural seabed are likely to be responsible for Gulf Coast spill
Mexican officials confirmed on Thursday that an oil spill in the Gulf of Mexico is due to both natural 'causes' and a petroleum 'tanker, which authorities are attempting to identify. Raymundo Morales is the Mexican navy's head. He said that satellite images showed an oil slick near the coast and that any of the 13 vessels which had passed by the area may have been responsible. Morales stated that four of the vessels were still in Mexican waters, and being inspected by the Navy. Mexico has asked for international assistance to inspect the nine remaining vessels, which are now in international water. Morales also added that two spots where natural sub-marine oil seepage has contributed to the petroleum products washing up on Mexican beaches. Morales believes that the leakage from the seabed, which is a major contributor to 'the submarine leak,' is continuing and continues. The seepage at the other location has been intermittent, but is now contained. Morales stated that "we need to assess the situation, whether natural seepage is increasing or if a structural problem has occurred on one of the platforms." Morales stated that the authorities, in coordination with Mexico’s state energy company Pemex are installing marine barriers to stop the spill from causing further damage to wildlife and beaches. Morales stated that Pemex also conducts underwater checks to rule out structural failures of oil rigs. The spill has affected marine wildlife and?stained the beaches in southern states Tabasco and?Tamaulipas. However, environment minister Alicia Barcena stated at the press event that the damage was not "severe." This issue was published?around the time of a March 17 incident in which five people died outside Mexico’s Olmeca refinery when "oily water" surrounding the perimeter caught on fire. Reporting by Raul and Adriana Barera, Writing by Natalia Siniawski, Inigo Alexander and Daina Beth Sool, Editing By Daina Beth Solon)
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Data centers forced to become more flexible by the US grid
In times of high demand for electricity, the U.S. tech industry is being pressured to reduce its power consumption. This comes amid growing public concerns that Big Tech's massive energy needs in expanding data centers will'max out' the country's electrical grid. When utilities and grid operators ask for it, the power industry and its regulators are increasingly pushing tech companies to make a concession that was previously unthinkable - they're asking them to?scale?back their energy consumption in giant server farms called data centers. The majority of the attempts to make data centres more flexible are in pilot mode. Data centers are under enormous financial pressure to remain on 24 hours a day. The process is complicated and there are many incentives. Heunets, an IT consultant, estimates that when data centers go down it costs technology companies around $9,000 per minute. The goal is to prevent blackouts, and high power bills during peak demand times of the year. Silicon Valley may benefit from increased flexibility to avoid potential crises. This could allow tech companies to win agreements faster for connecting their new data centres. According to a study conducted by EPRI, the Electric Power Research Institute (EPRI), the electricity consumption of data centers will more than quadruple in the next decade, consuming as much as 17% U.S. energy supplies. Chris Wright, U.S. energy secretary, said this week at the CERAWeek Conference in Houston that it is not the electrons on a grid but the ability to meet demand at peaks. When electricity demand is high, the supply must match demand or people will die. During a winter storm, the Department of Energy instructed data centers on the largest regional grid in the United States - PJM interconnection - that they should run their backup generators so as to release power from the grid. PJM, the largest data center market in world, projects supply shortages by next year if the demand continues to exceed new supply. "Finding a flexible management method is the only way we can get through as an industry," said Stu Bresel, chief operating office of PJM interconnection. According to a study released by Duke University’s Nicholas Institute for Energy, Environment & Sustainability, taking action when local grids reach their maximum capacity could save $40 to $150 billion over the next decade in capital investments. This would allow households and small business to avoid paying for the build-out of grids for data centers. Demand response is a practice in the electric industry that allows utilities and grid operators to ask massive server warehouses to reduce their energy consumption. This will ease fears about rising costs and power shortages. Matt O'Connor is the Chief Investment Officer for International Energy at Carlyle. The company develops and invests data centers. He said: "I believe we will see and we are already seeing that heavy users of data centers can figure this out and model it into their operations." TRANSITION PERIOD In the past, data centers have not participated in demand response. According to industry sources, traditional cloud data centers which store data at a single location must have a "constant and consistent" energy source. Otherwise the data may be compromised. The data centers that are being built to develop artificial intelligence could be more flexible. This would allow for the energy-intensive training of large language models to be moved to other sites. Companies are now committing to shifting workloads from data centers to other facilities, or using backup power instead of drawing electricity from the grid at peak periods. Google announced recently contracts with several utilities that will lower the consumption of certain data centers if needed. Nvidia launched an initiative with Emerald AI this week to control and move power consumption from servers warehouses during grid demand spikes. This week, EPRI also?released an?framework with input from dozens of power companies and?technology firms, including Meta, outlining how data centers can be more flexible. It is hoped that this effort will reduce the time required to connect data centres. Owners increasingly ask how to make their data centres more flexible. Jennifer Cahill is an associate vice-president at Black & Veatch. The firm's customers include technology and utility companies. Cahill explained that "you're experiencing a period of transition where everyone would like to make the change, and we are working out how it can be achieved."
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CERAWEEK-Constellation exec says grid operator told company Three Mile Island can't connect until 2031
The U.S. grid operators PJM and Constellation Energy have told Constellation Energy that the former 'Three Mile Island Nuclear Power?plant in Pennsylvania will likely not be able connect to the grid before 2031. This is four years later than originally planned. Constellation has been working on a plan to restart operations at the nuclear plant, which will be renamed as the "Crane Clean Energy Center" to provide electricity to Microsoft's data centers. Constellation's chief?external? affairs and growth officer, David Dardis said that the company would?be able to produce electricity by the earlier goal and is?talking with grid operator PJM to reduce the timeline. Dardis said, "We'll have it ready in 2027." PJM said in its initial feedback regarding the interconnection plan of the restarted power plant that it would take until the year 2031 to complete certain transmission upgrades required for the plant's connection to the grid. Dardis said Constellation was 'in talks with transmission owners about accelerating the timeline. Following a report, shares of?the firm were down by 3%. Constellation, America's largest independent power producer, announced that Microsoft had signed a contract to reopen a nuclear power plant in 2024. Three U.S. nuclear plants are in the process of re-starting due to the demand from Big Tech data centers and electrification for buildings and transportation. Reporting by Laila?Kearney in Houston, editing by Lisa Shumaker and David Gregorio
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Chicago grains are subdued by war uncertainty
Chicago corn, soy, and wheat futures sawsawed Thursday as traders watched developments in the Middle East amid'mixed signals' from both the U.S. The Chicago Board of Trade's most active corn contract settled at $4.67 per bushel, a 1/4-cent decrease. CBOT wheat ended 7-1/4 cents above $6.05 per bushel while CBOT soya beans finished 2 cents ahead at $11.73-3/4 a bushel. Prices rose in the previous session due to technical buying, and the uncertainty surrounding the negotiations to end the U.S./Israeli war against Iran. "It's ?the president. There's no way of preparing for what he says when it happens. Ed Dugan, broker with StoneX, said that the market is driven by this. The uncertainty over the end of the conflict held?crude oil's price steady on Thursday. This helped push up soyoil prices, which are widely used as biofuel. Grain and oilseed prices were held in check by a rise in the US dollar as well as a cautious approach to widely anticipated U.S. agriculture news. Traders will be watching for an announcement on revised U.S. Biofuel targets during a White House Event this Friday. This has helped support the soy industry. Next Tuesday, the U.S. Department of Agriculture will release its acreage estimates. The Middle East conflict has increased fuel and fertilizer prices. This is affecting farmers' decisions. After?Wednesday’s announcement that U.S. president Donald Trump would now be visiting Beijing on May 14-15, in a rescheduled trip? The news helped soybeans rise on Wednesday. It sparked speculation that China would make new purchases in the context of trade negotiations. Analysts remain cautious, however, given China's recent shift to Brazil as the South American country prepares for a record harvest. Wheat market continues to monitor the drought in U.S. Plains. Forecasts show that rain is unlikely to arrive before early April, and this week's hot weather will likely exacerbate it.
Europe stocks continue record run on defence sector boost
The European share market reached a new high on Tuesday, as defence stocks rose on the prospect of higher military spending in the area. However, a Capgemini led drop in IT shares capped the gains.
The STOXX 600 pan-European index rose by 0.2%, to a new record of 555.42. The aerospace and defense index jumped 1%.
After European Commission President Ursula von der Leyen announced that the Commission would propose an exemption for defense spending from EU budget limits, the sector grew by 4.6% Monday. This is its largest one-day increase since Russia invaded Ukraine, in February 2022.
Defense stocks gained on Tuesday. Italy's Leonardo rose 1.4%; Sweden's Saab increased by 1%; and Britain's BAE Systems advanced 0.5%.
Thyssenkrupp's warship division is being spun off and Thyssenkrupp has gained 2.7%. Its shares had risen nearly 20% Monday.
Capgemini, on the other hand, fell 6.2%, despite the fact that the French IT giant had reported an annual sales decline of 2%, which was above expectations.
IHG, owner of Holiday Inns, has lost 1.3% since the release of its results for 2024.
Antofagasta's core profit increased by 11%. (Reporting and editing by Savio d'Souza in Bengaluru, Pranav Kashyap from Bengaluru)
(source: Reuters)