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Stocks continue to fall as Trump's extension of the Trump-Pence fails to calm markets
The global stock markets dropped again on Friday, after U.S. president?Donald Trump extended a deadline to Iran for it to reopen the Strait of Hormuz. This did not calm down oil prices or government bond yields. Trump's decision to postpone the deadline came after Wall Street closed its biggest one-day drop since the beginning of the war on Thursday. Oil prices rose again on Friday, and government bonds fell. The markets appeared to be sceptical that a deal could be reached between the two parties. After a 1.1% decline on Thursday, the pan-European STOXX 600 Index fell?0.7% at opening trade. Overnight, MSCI's Asian share index excluding Japan dropped 0.6%. MARKETS STRUGGLING OFF TRUMP DELEGATION Futures for the U.S. S&P500 gave up gains earlier and were flat at the last session, after falling 1.7% the previous day. The Nasdaq composite, which is a tech-focused index, fell 2.4% on Thursday. This means that the index has fallen nearly 11% since its record-high closing in late October. Nasdaq Futures were also flat. The Wall Street Journal's report that Trump is considering sending more troops has added to the concern that the war could escalate into a ground-based conflict. There is also no certainty that shipping will soon be allowed through the Strait of Hormuz, which typically carries 20% of the world's energy. On Thursday, an Iranian official called the U.S. plan to end this conflict "unfair and one-sided". Matt Britzman is a senior equity analyst at Hargreaves Lansdown. He said that words alone were not enough to change the mood. The need for tangible evidence of progress. Brent crude oil rose by around 2%, to $110 per barrel. Global Bond Yields Surge Investors grappled with the possibility of inflationary shocks that could force central bankers to increase interest rates. As prices drop, yields also rise. The 10-year U.S. Treasury yield, which sets the global tone for borrowing rates, has risen 4 basis points to 4,456%. This is its highest level since last July. Money markets see roughly 70% chances that the U.S. Federal Reserve will raise rates this year. This is a "sharp" change from February, when traders were betting on two rate cuts in 2026. The yield on Germany's 10-year bond rose to its highest since 2011 of more than 3.1%. The U.S. Dollar Index, which measures the currency's performance against six other currencies, gained 0.1%, marking a fourth consecutive session of gains.
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Taiwan freezes its electricity rates in order to maintain price stability and industrial competitiveness
Taiwan won't raise electricity prices at this time despite the increase in energy prices caused by the Middle East war, according to the Economy Ministry. This will help to maintain price stability and industrial competitiveness. The government has been heavily subsidising energy to limit the impact on consumers of the rising energy prices caused by the Middle East war. The ministry released a statement saying that "in light of the 'risks' arising from the escalating conflict and the changes in international tariffs and to maintain industrial competitiveness and stabilize consumer prices, the committee decided to not adjust electricity rates at this time." Taiwan is a major supplier of advanced semiconductors that power the AI megatrend. The Ministry's Electricity Price Review Committee meets every end of March and September for discussions on rates for the state-owned utility Taipower. Taiwan had to look at alternative sources of crude oil and LNG, including in the United States, since the beginning of the war, given its heavy dependence on Middle East. Taiwan has 'also re-examined the use of nuclear energy, after closing the last station in the south of the island last year. In a separate statement, Taipower announced on Friday that it had submitted a proposal for the reopening of this plant to the Nuclear Safety Commission. It added that, 'even if this plan is approved the plant will not be back in operation immediately as safety inspections can take up to 2 years. (Reporting and editing by PhilippaFletcher; Ben Blanchard, Jeanny Kao)
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Sources say Asian refiners are switching from Dubai to Brent for US crude pricing
Three sources in the refining industry said that Asian refiners have begun to price U.S. crude oil purchases against the global benchmark ICE Brent rather than Dubai after Middle East benchmark ICE Dubai spiked to'record levels' this month. One of the traders said that the move could result in a reduction in liquidity on the Middle East benchmark derivatives market, as traders switch hedges to ICE Brent. Asian buyers have just started booking U.S. cargoes to be delivered in July,?he said. He added that Japanese refiner Taiyo Oil purchased 2 million barrels. Light crude was offered via a tender for delivery in July at a price of $19 a bar above ICE Brent. The Japanese refiner, who typically purchases WTI crude at prices pegged to Dubai, declined comment. The same source reported that other Japanese refiners had also purchased U.S. Crude priced against ICE Brent in place of Dubai. The source said that details of these deals could not be immediately revealed as they were done in private negotiations. Dubai's oil price soared to a record high of $169.75 per barrel last week, surpassing Brent. The Middle East now supplies the most expensive crude in the world. This is because S&P Global Platts?excluded?three of five crude grades? in anticipation of a long-term disruption in shipping through the Strait of Hormuz. Dubai prices have been supported by the strong demand of TotalEnergies, a French company. Traders said that due to the volatility of the market, Asian refiners requested the top?exporter Saudi Aramco switch its 'benchmark' from Platts Dubai to ICE Brent. Outside of office hours, it was not possible to reach Saudi Aramco for a comment.
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The PM has said that the government of Romania could reduce temporarily the excise taxes on fuels.
In a recent media interview, Prime Minister Ilie Bolojan stated that Romania's broad coalition could decide to lower excise duty?on fuels temporarily next week to combat the economic repercussions of the Iran war. The government approved the first set of measures on Thursday. These include limiting the exports of gasoline and the amount of biofuel that can be added to it for three months, as well as capping the fuel price increase at the average level of last year. After criticism by employers and unions, the approved measures were 'watered-down' from their initial plans. Leftist Social Democrats, government's biggest party and vocal critic of Bolojan, also asked for the government to?lower the excise tax. Bolojan, a journalist for the news website G4media.ro, was quoted by the site as saying: "From the standpoint of excise duty, it is the simplest solution and we are very likely to go for this aspect." "On the other hand, it is important to estimate the amount of a reduction in excise duties that the Romanian government - and the state as a whole - can support, for how long. Unfortunately, we cannot predict the duration of the war with Iran." The Finance Ministry approved earlier this month a 652 mil lei (147.23 mill) scheme of?state assistance? to offset?partially the gasoline prices? for road transporters. Farmers will also receive a similar scheme. (Reporting and editing by SonaliPaul; Luiza Ilie)
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For hungry markets in Europe, it was the kids' menu.
Stella Qiu gives us a look at what the future holds for European and global markets. Investors who bet on TACO'seemed to have gotten what they wanted. Donald Trump, after Nasdaq fell?into correction area overnight, announced that he would delay his planned attacks on Iranian power stations for another 10 days. The price response?has?not been as completely awe-inspiring as he had hoped. Brent crude futures fell less than 1%, to $107.24 per barrel. This is a small decline after a nearly 6% rise overnight. Wall Street futures are up 0.4% but this is nothing compared to the surge on Tuesday, when Trump extended his 48-hour deadline?to five days. The EuroStoxx 50 futures in Europe rose by 0.5% while Treasuries, the dollar and other currencies are mostly flat. Investors may be growing numb with Trump's verbal assurances. Some thought that by extending the date twice, Trump was merely pushing the issue?down to the future, which would suggest the war will not end anytime soon. Reports that an additional?10,000 U.S. soldiers may be headed to the Middle East fueled fears of a ground conflict. Mission creep could drag the U.S. to a full-blown war. However, there is no guarantee that the Strait of Hormuz will be opened anytime soon. This led to cautious trading over the weekend. MSCI's broadest Asia-Pacific share index outside Japan has fallen over 11% since its peak at the end of February. Japan's Nikkei fell 10% from its peak in February. South Korea's KOSPI fell 1.5% bringing their weekly loss to an imposing 7%. Central banks warn against raising rates if they can, to combat a stagflation-like threat, similar to the 1970s. Norges Bank in Norway raised eyebrows on Thursday with a "spectacular" U-turn, saying it would not be raising rates this year despite previously predicting three reductions by 2028. Both Governor Michael Barr and Vice-Chair Philip Jeffers sounded worried about sticky inflation. Three of their colleagues are scheduled to speak later today. The markets will be listening out for more hawkish opinions. The stakes are high, given the recent seismic shift in market pricing. A rate increase in September is already priced in at about 50%. Fed officials were predicting a rate reduction this year. The following are key developments that may influence the markets on Friday. The Middle East Conflict: Recent Developments Retail sales in the UK are published for February Thomas Barkin and Anna Paulson, as well as Mary Daly, Fed officials speak
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INDIA BONDS - Fuel tax cuts in India deal a fresh blow to bonds amid oil boom and heavy debt supply
Indian government bonds fell after New?Delhi’s excise duties on fuel clouded fiscal?outlook. This exacerbated market anxiety, already stoked due to the war-driven rise in oil prices and heavy debt supply. As of 10:40 am IST, the benchmark 6.48% bond yield for 2035 was 6.9256%. It had closed at 6.8750% during the previous session. The yield had reached 6.9523% earlier in the day. This was its highest level since July 2024. Bond yields are inversely related to bond prices. The bond market is caught up in a storm caused by adverse triggers which have pushed yields upwards. The end of the financial year is not what the market or regulator may have wanted, according to a trader at a private banking firm. New Delhi has reduced the special excise tax on petrol from 13 rupees to 3 rupees a litre. The duty on diesel was also reduced to zero rupees from 10 rupees, as fuel prices remain volatile and supplies are 'choked' by the Middle East - war. The impact of the duty reductions on the Indian government is estimated by economists at $15.91 billion to $16.97 billion for fiscal year 2027. Brent crude is hovering around $105 a barrel. Energy shipments have been halted through the Strait of Hormuz due to the war. The Strait of Hormuz carries one-fifth of all oil and LNG supplies in the world. India is the third largest crude importer in the world. High oil prices threaten to worsen inflation at home and increase the current account deficit. India has'retained' its inflation target of 4% over the next five-year period. Demand has also been impacted by supply pressures. Indian states are looking to raise 429.4 bn rupees via bond sales in the coming days, after raising a record 12.31 trln rupees during this financial year. As oil prices and Treasury yields remain high, India's overnight swap rates (OIS) have been under a lot of pressure. The two-year OIS was trading at 6.2850%, but the one-year OIS had not been traded yet. The liquid rate for five-year swaps was 6.65%.
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REFILE-Asian government scrambles to assure markets after Middle East war saps market confidence
As the U.S.-Israeli conflict with Iran continues, a growing number of governments are scrambling for liquidity and to calm the financial markets. This is due to the pressure that the war on Iran has placed on their currencies, and the volatility in the market. How different countries respond: SOUTH KOREA South Korea is planning to 'buy back emergency bonds worth 5 trillion won ($3.32 billion), to inject liquidity into the local bond market, and to cap rising yields. This comes after three-year treasury yields reached their highest level since mid-2024. The ministry has also extended fuel tax reductions and is currently drafting a 25 trillion won supplementary budget, which could include vouchers of cash for consumers and financial assistance for businesses. The Finance Ministry aims to submit the budget to the Parliament by March's end. The Japanese government will use?800 billion ($5 billion) of reserve funds to fund subsidies that aim to keep gasoline prices at around 170 yen a litre. The measure could cost up to 300 billion yen a month. The Middle East Crisis is driving energy prices sharply upwards. PHILIPPINES On March 26, the Philippines' central banks convened an unexpected, off-schedule, policy review. It said it was to reassure the market that they were?assessing the situation. It signaled that it would be ready to act if inflation expectations dropped. AUSTRALIA The Australian government has yet to make any major policy changes, or proposals. They have only taken steps to ensure the imports of fuel and diesel which are in short supply due to panic-buying. Prime Minister Albanese will meet with state premiers and chief minsters next week in order to devise a plan for managing the fuel crisis. The government anticipates that the crisis will last several months. The government has not considered fuel rationing, but it may consider other voluntary measures such as encouraging people to work at home. In May, the government will release its budget for 2026/27. It is being urged to reduce spending while some groups push for energy relief policies such as cutting taxes on fuel or providing direct assistance to households and small businesses. The government is considering taxing "excess profits" made by Australian gas companies to raise much-needed revenues. The central bank of Australia is more worried about inflation than economic development and has raised interest rates twice this year, to 4.10%. It could raise them again in May. NEW ZEALAND New Zealand 'has temporarily aligned its fuel standards with Australia in order to increase the import options. It will also provide temporary weekly assistance of NZ$50 (US$29.30) to low-income families from April to offset rising costs. The government also updated its National Fuel Plan and made it public. It outlines four phases of response for petrol, jet fuel and diesel fuel.
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Oil prices set to fall the most in a single week since 6 months
Oil prices dropped on Friday, and were on track to have the steepest weekly drop?in the past six months. This was after U.S. president Donald Trump announced that talks with Iran on a 'peaceful end' had been going well and he would pause his attacks on Iran’s energy plants for ten days. Brent futures dropped 84 cents or 0.8% to $107.17 a barrel at 0353 GMT. U.S. West Texas Intermediate Futures lost $1.02 or 1.1% to $93.46 a barrel. On a weekly basis, both benchmarks traded 4.6% lower despite Brent increasing 5.7% and WTI gaining 4.6% Thursday due to fears of a further escalation in the war. Oil is not only trading on headlines, but also the length of war. Priyanka?Nova, an analyst with Phillip?Nova, said that any direct damage to the oil infrastructure or prolonged war could 'force markets to quickly reprice higher. Trump has announced a pause on attacks against Iran's energy grid, but the U.S. also sent thousands troops to the Middle East. Trump is weighing the use of ground forces to take over Iran's strategic oil center of Kharg Island. A senior Iranian official said that the 15-point U.S. plan, which was sent to Tehran by Pakistan, was unfair and "one-sided". The war has deprived the world of 11 million barrels per day of oil, according to the International Energy Agency. Macquarie Group analysts said that if the war ends soon, oil prices will drop quickly, but remain at pre-conflict level. They said that prices could increase to $200 if war continues until the end of June. The market is becoming more and more pressured with each passing day. Mukesh sahdev, CEO and founder of the Australia-based consultancy XAnalysts, said that Asian countries are 'tapping buffer stocks' to adjust demand. Helen Clark reported from Perth, and Sudarshan Varadhan from Singapore. Sonali Paul and Saad Saeed edited the article.
Oil shock causes record-breaking flight of foreign investors from Indian assets, causing rupee to plummet
The rupee is in a tailspin as foreign?investors pull out at record rates from Indian bonds and equities. This is due to the Iran War-driven rise?in oil price, which has sparked a flurry of 'worries about a possible increase?in inflation.
Since the beginning of the war on February 28, foreign investors have sold an estimated $12.14 billion in Indian shares, marking the largest monthly outflow ever recorded.
The net bond sales of foreign portfolio investors under the Fully Accessible Route, or FAR, reached 152 billion rupees (1.6 billion dollars), the highest amount since the category was first introduced six years back.
The?rupee has fallen to new all-time lows due to these outflows and risk-off sentiment. The local currency dropped 0.9% on Friday to 94.7875. It has fallen about 4.2% since war began. This is compounding the losses of?foreigners and has likely hastened their exit from Indian assets.
India faces increased macro-risks as a result of the war against Iran. The conflict has been ongoing for nearly a month. India imports between 85-90% its crude oil, making it vulnerable to rising oil prices.
The rupee's volatility and Indian equity prices are expected to rise as a result of the?worries.
Economists have revised up their inflation forecasts. They've also downgraded growth estimates and included a steeper depreciation of the rupee in their "baseline".
The escalation of the Middle East has brought energy risks to the forefront of India's macro outlook, with the oil?price, the rupee, and the current accounts now closely?intertwined. ", said Krishna Bhimavarapu. APAC Economist, State Street Investment Management.
Since the war, hedging costs for rupee depreciation also increased. The increased volatility expectations and this have eroded foreign investor's interest in Indian bonds and stocks.
(source: Reuters)