The Tamesis
Oil prices rose again on Wednesday, approaching $100 a barrel, while Asian markets were mixed. Further attacks between the United States and Iran have dented hopes of an imminent peace deal.
Wall Street indexes opened lower, with European stocks mostly lower, while Asian stocks had a mixed day.
Despite a purported ceasefire, a drone attack killed one person and injured dozens more at Kuwait International Airport’s passenger terminal as tensions in the Middle East escalated, oil prices surged and the U.S. dollar largely strengthened.
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The Organization for Economic Cooperation and Development warned on Wednesday that the Gulf War has already hit global economic growth prospects and may cause a more serious impact if an effective ceasefire agreement cannot be reached before 2027.
The group of 38 industrialized countries said in its quarterly update that if energy exports from the Gulf of Hormuz return to pre-conflict levels in the third quarter, global economic growth is expected to slip to 2.8% this year.
“The longer the disruption lasts, the greater the economic and social costs will be,” said Stefano Scarpetta, chief economist at the OECD.
He noted that many countries would be at risk of slipping into recession, while falling investment spending (“including on energy-intensive AI”) could push unemployment higher.
Marvell shares soar 32%
However, enthusiasm for artificial intelligence continues to support investor sentiment, pushing Wall Street indexes to record highs, with U.S. chipmaker Marvell Technology’s shares soaring 32% on Tuesday after Nvidia CEO Jensen Huang praised it as the next trillion-dollar company.
“Stock markets are once again taking their cues from the tech sector rather than geopolitical headlines,” said Chris Beauchamp, chief market analyst at IG.
“Tensions around Iran have not dampened investor interest, with a series of AI-related announcements providing a more convincing narrative for the market this week,” he said.
inflationary pressure
Data showing U.S. job openings jumped to the highest level in nearly two years in April added to the positive sentiment among stock traders.
The data comes ahead of Friday’s U.S. jobs data that could determine whether the Federal Reserve will keep its benchmark interest rate steady or potentially raise borrowing costs to combat inflation.
Still, oil prices rose as a ceasefire in the Middle East proved elusive, exacerbating inflationary pressures that may take months to ease even if a ceasefire is reached quickly.
“The longer the disruption around the Strait of Hormuz continues, the greater the risk that global oil inventories will not be enough to offset supply losses,” said Fawad Razaqzad, market analyst at Forex.com.
In Asia, the yen strengthened on speculation that Japanese authorities may step in to support the yen following last month’s intervention.
Meanwhile, Japan’s cabinet approved a $19 billion supplementary budget to support households whose daily expenses have soared due to the war in Iran.
The Tokyo index closed up 2.5%, driven by a surge in shares of chipmaker Tokyo Electron.
Taipei shares rose 2% thanks to strong gains from Taiwan Semiconductor Manufacturing Co.
Meanwhile, the European Union said it would relax spending rules to help member states cope with soaring energy prices caused by war in the Middle East.
Key figures around GMT 1345
North Sea Brent crude oil: rose 1.3% to $97.29 a barrel.
West Texas Intermediate crude oil: rose 1.2% to $94.95 a barrel.
NEW YORK – Dow Jones Industrial Average: down 0.4% to 51,099.37.
NEW YORK – S&P 500: down 0.2% to 7,592.80.
NEW YORK – Nasdaq Composite: down 0.3% to 27,025.11.
LONDON – FTSE 100: down 0.1% to 10,365.67.
PARIS – CAC 40: down 0.5% to 8,168.28.
FRANKFURT – DAX: down 1.0% to 24,869.54.
TOKYO – Nikkei 225: up 2.5% to 68,402.13 (close).
Hong Kong – Hang Seng Index: down 1.6% to 25,633.21 (close).
Shanghai – Composite Index: rose 0.2% to 4,083.97 (closed).
USD/JPY: rose from 159.92 yen to 159.94 yen.
- Further editing by Jim Pollard, AFP
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Asian markets rise, oil prices steady as traders assess prospects for peace
