Politics
Iran conflict pushes oil prices higher as stocks slip, dollar strengthens
- Traders rapidly reduce Fed rate cut wagers for year.
- All major US stock indexes log daily and weekly declines.
- US dollar continues its climb amid crisis.
Stocks fell and the US dollar strengthened on Friday as uncertainty over the Iran war continued to disrupt energy supplies, heightening concerns over fuel prices and interest rates.
The price of oil crossed $100 per barrel even as an Indian tanker sailed out of the Strait of Hormuz and the US put forth measures to try to ease supply concerns.
All three major US stock indexes logged daily and weekly declines. The Dow Jones Industrial Average finished Friday down 0.25%, the S&P 500 fell 0.6% and the Nasdaq Composite dropped 0.9%.
European shares extended their declines as well, with Europe’s STOXX 600 down 0.5% on Friday. MSCI’s gauge of stocks across the globe fell 0.9%.
The dollar has become the safe haven of choice during the tumult, putting most other currencies under pressure. The US currency gained for the second consecutive week, up 0.8% on the day against a basket of currencies .
Oil price driving market
President Donald Trump said the US was going to be hitting Iran “very hard over the next week,” shortly after issuing a partial 30-day waiver for purchases of sanctioned Russian oil, hoping to ease prices.
Front-month WTI crude futures settled at $98.71 per barrel, up 3.11%. Brent rose 2.67% to $103.14, settling above $100 per barrel for the first time since August 2022.
Traders are trying to predict how long the disruption to oil supplies will last.
“Headlines are coming at the market like water from a fire hose, which is impacting the price of oil, and consequently, financial markets,” said Mitch Reznick, group head of fixed income at Federated Hermes.
With Iran stepping up attacks across the Middle East as its new Supreme Leader Mojtaba Khamenei vowed to keep the Strait of Hormuz shipping lane closed, investors are bracing for a prolonged conflict and higher oil prices.
The spectre of rising inflation has led markets to rapidly reprice what they expect from central banks this year, with traders now anticipating just 20 basis points of easing from the Federal Reserve compared to 50 bps of cuts priced in last month.
Two-year Treasury yields, which typically move in step with Fed interest rate expectations, hit a six-month high on Thursday.
Elsewhere, the Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation gauge, rose 0.3% in January on a monthly basis, in line with economists’ estimates.
At the same time, US economic growth slowed more sharply than initially thought in the fourth quarter amid downward revisions to consumer spending and business investment, government data showed on Friday.
“With markets laser-focused on oil prices and geopolitics, today’s numbers may mostly fly under the radar,” Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said in an email.
“Despite signs of economic softening, more sticky inflation data simply strengthens the idea that the Fed will remain on the sidelines.”
Shifting rates outlook
Interest rate futures that had been priced for two quarter-point cuts by the end of the year before the conflict began are now barely pricing in one.
For US government bond trading on Friday, the two-year note yield fell 3.3 bps to 3.73% after hitting its highest level since August 22 on Thursday. US 10-year notes ticked up to 4.283%.
Investor focus will switch to a slate of policy meetings next week, with the Fed, the Bank of Japan, the European Central Bank and the Bank of England all due to meet, with most expected to keep rates unchanged.
In currencies, the euro fell 0.8% to $1.1417, while the yen hit its weakest since July 2024 at 159.66 per US dollar on Friday as Japan warned it was ready to take action to protect against yen declines.
Analysts said the bar for intervention is higher this time around, as any action now could prove futile in the face of relentless dollar buying.
Gold was 1.27% lower at $5,014 per ounce on Friday, capping a drop on the week.
- Iran dismisses US escort plan as counterproductive initiative.
- Dar reiterates diplomacy as only path forward.
- Tehran reviews US response via Pakistani mediators.
Iranian Foreign Minister Abbas Araghchi on Monday night said talks with the United States were making progress with Pakistan’s “gracious effort,” while cautioning Washington against being drawn into further escalation amid a standoff over the Strait of Hormuz.
The statement comes after US and Iran launched new attacks in the Gulf on Monday as they wrestled for control over the Strait of Hormuz with duelling maritime blockades, shaking a fragile truce.
US President Donald Trump launched a new effort to get stranded tankers and other ships through the strait, the vital energy-trade chokepoint that has been virtually closed since the US and Israel began attacks on Iran in February, a war that has killed thousands of people across the region.
Trump gave scant details about his new effort, which he called “Project Freedom,” to help stuck ships travel through the strait when he announced it on social media, two days after a legal deadline under US law had passed for him to get authorisation from Congress for the war. Trump told Congress the war was “terminated” and the deadline was moot, a claim disputed by some lawmakers.
It was the first apparent attempt to use military force since last month’s ceasefire announcement to unblock the world’s most important energy shipping route, which Iran’s Islamic Revolutionary Guard Corps has said can only happen with its permission.
The cost of shipping insurance has also rocketed. For weeks, the US Navy has blockaded Iran’s trade by sea, which Iran says is itself an act of war.
But Trump’s latest move, at least initially, appeared to have backfired, bringing no surge of merchant ship traffic while provoking a promised show of force from Iran, which has threatened to respond to any escalation with new attacks on its neighbours hosting US soldiers. Major shipping companies said they were likely to wait for an agreed end to hostilities before trying to cross the strait.
Meanwhile, Iranian FM Araghchi said Monday’s events showed there was no military solution to the crisis. He said peace talks were progressing with Pakistan’s mediation while warning the US and the UAE against being drawn into a “quagmire by ill-wishers.”
Criticising the US initiative aimed at escorting vessels through the Strait of Hormuz, Araghchi said: “Project Freedom is Project Deadlock.”
Nonetheless, the US military said two US merchant ships made it through the strait, without saying when, with the support of Navy guided-missile destroyers. While Iran denied any crossings had taken place in recent hours, Maersk said the Alliance Fairfax, a US-flagged ship, exited the Gulf via the Strait of Hormuz accompanied by the US military on Monday.
The commander of U.S. forces in the region said his fleet had destroyed six small Iranian boats, which Iran also denied. Admiral Brad Cooper said he “strongly advised” Iranian forces to keep clear of U.S. military assets carrying out the mission.
Iranian authorities released a map of what they said was an expanded sea area now under their control, extending far beyond the strait to include long stretches of the UAE’s coastline.
‘Dialogue and diplomacy’
A day earlier, Deputy Prime Minister and Foreign Minister Ishaq Dar held a telephonic conversation with his Iranian counterpart, during which both sides discussed the evolving regional situation and Pakistan’s ongoing diplomatic efforts.
According to the Foreign Office, Araghchi appreciated Pakistan’s constructive role and mediation efforts, while Dar reaffirmed Islamabad’s commitment to promoting dialogue and engagement.
He stressed that diplomacy remained the only viable path to achieving lasting peace and stability.
Negotiations between Washington and Tehran have remained stalled since a ceasefire took effect on April 8, with tensions centred on Iran’s blockade of the Strait of Hormuz following US-Israeli strikes. The move has disrupted global flows of oil, gas and fertiliser, while the United States has responded by imposing a counter-blockade on Iranian ports.
Pakistan has emerged as a key intermediary in efforts to revive dialogue, hosting high-level engagements between the two sides in Islamabad last month, though a second round of talks has yet to materialise.
— With additional input from Reuters
- Hunan fireworks factory blast kills 21, injures 61.
- Xi orders thorough probe into deadly factory explosion.
- Nearly 500 rescuers deployed after Hunan explosion.
HONG KONG: A blast at a fireworks factory in China’s Hunan province has killed 21 people and injured 61, prompting President Xi Jinping to call for a thorough investigation, state media reported on Tuesday.
The blast in Hunan’s capital city of Changsha, home to a hub for fireworks manufacturing, occurred on Monday around 4:40pm (0840 GMT), according to reports by CCTV and Xinhua.
Videos on Chinese internet platforms showed thick smoke billowing from a large site with collapsed buildings and debris strewn around the area. Reuters could not verify the footage.
Nearly 500 firefighters, rescuers and medical personnel attended the scene, according to the South China Morning Post.
The blast happened at Huasheng Fireworks Manufacturing and Display Company, media said. Reuters could not find a telephone listing for the company to seek comment.
Xi called for a speedy investigation to determine the cause of the blast and strict accountability for the incident, Xinhua reported.
Last year, China exported $1.14 billion worth of fireworks, more than two-thirds of global sales, data from the Observatory of Economic Complexity shows.
Xi also ordered authorities to strengthen risk screening and hazard control in key industries, enhance public safety and ensure the safety of people’s lives and property.
Last week, he urged a nationwide upgrade in China’s disaster response capacity.
The US Secret Service said on Monday it was on the scene of an officer-involved shooting in Washington in which one person was shot by law enforcement.
“US Secret Service personnel are on the scene of an officer-involved shooting at 15th Street and Independence Avenue in Washington, D.C. One individual was shot by law enforcement; their condition is currently unknown,” the Secret Service said in a statement on X. The White House was briefly locked down on Monday afternoon.
The DC Police Department said police were on the scene of the probe.
“The scene is secure. Avoid the area as roads will be closed for several hours,” police said in a statement.
Law enforcement agents have been on alert in recent days in the US capital following a shooting at the White House Correspondents’ Association Dinner late last month, over which a suspect has been arrested.
This is a developing story, and it is being updated with new developments.
He Couldn’t Land a Job Interview. Was AI to Blame?
North India cotton yarn prices rise despite weak domestic demand
India among most resilient large EMs, better placed for future global shocks; policy reforms & strong buffers help: Moody’s – The Times of India
-
Tech1 week agoA Brain Implant for Depression Is About to Be Tested in Humans
-
Tech1 week agoAlmost 90% of women leave tech industry within 10 years | Computer Weekly
-
Business1 week ago‘I had £20,000 stolen and had to fight a 13-month fraud reporting rule to get it back’
-
Sports7 days agoPro wrestling star Steph De Lander reveals how colleague’s advice helped lead her to title triumph at ACW
-
Business1 week agoPakistan’s oil market is fuelling the crisis | The Express Tribune
-
Entertainment1 week agoNorway joins Type 26 Frigate Programme to boost NATO naval power
-
Entertainment1 week agoMelania Trump says ABC should ‘take a stand’ on late-night host Kimmel
-
Tech1 week agoThis Ambitious Laptop Doesn’t Leave Much Room for Your Hands