Oil Extends Gains After Iran Attacks Crude Carrier: Markets Wrap
(Bloomberg) — Crude oil extended gains and US equity-index futures dropped after Iran struck a Kuwaiti crude oil carrier in Dubai port as the war in the Middle East showed little sign of easing.
West Texas Intermediate crude rose 3.4% to more than $106 a barrel after the attack. Futures contracts for the S&P 500 Index fell 0.3% in early Asian trading. That came after the gauge dropped 0.4% on Tuesday, the lowest level since August, leaving it less than 1% away from a correction.
Equity-index futures for Japan, South Korea and Hong Kong slipped, while Australian shares were a touch weaker at the open.
The war in the Middle East has upended global markets and triggered concern about a simultaneous spike in inflation and slowdown in economic growth. The conflict has severed a crucial route for energy supplies, boosting oil prices and driving the S&P 500 toward its worst month since 2022.
The conflict, in its fifth week, showed little signs of easing with the White House signaling a potential escalation against Iran, including targeting critical civilian energy infrastructure.
President Donald Trump said that if Tehran doesn’t re-open the Strait of Hormuz, “we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating” electricity plants, oil facilities and “possibly” desalination infrastructure.
Meanwhile, Treasuries advanced on Monday after Federal Reserve Chair Jerome Powell downplayed near-term inflation risks from higher energy prices.
Treasuries trimmed what’s expected to be their worst monthly selloff since 2024 as Powell said longer-term inflation expectations appear to be in check, with traders erasing wagers on a rate hike. Inflation expectations are “well anchored beyond the short term,” Powell said Monday, adding policymakers may need to respond to fallout from the conflict, though not yet.
Yields on Australian and New Zealand bonds declined early Tuesday, tracking the moves in Treasuries.
“Powell’s calm tone along with overdue market focus on the growth risks from higher-for-longer oil are helping to fuel a turn in rates pricing,” said Krishna Guha at Evercore. “The probability of one or more cuts is much higher than the probability of a hike.”
Meanwhile, the Nasdaq 100 is trading 12% below its October record; on Friday, it pushed past the threshold that indicates a technical correction. The rout was spurred by concern that surging oil prices from the war in the Middle East could choke off economic growth and reignite inflation.
“The market continues to be headline-driven as the Trump Administration has delivered a variety of messages surrounding de-escalation and re-escalation of the war in Iran,” said Chris Senyek at Wolfe Research. “As such, we maintain our defensively positioned posture.”
Meantime, the trading desk at Goldman Sachs Group Inc. said signs of capitulation are starting to emerge among hedge funds, and the systematic community is running out of steam. It anticipates that trend-following investor CTAs will be buyers in every scenario over the next month.
In Japan, the nation’s top currency official helped strengthen the yen by delivering his strongest warning yet to speculators that authorities may take bold action in markets if current conditions persist. Atsushi Mimura, vice finance minister for international affairs, spoke as the currency slid past the 160 per dollar level at the end of last week for the first time since Japan intervened in the market in July 2024.
Corporate Highlights:
Morgan Stanley’s E*Trade unit is in talks with SpaceX to lead the sale of IPO shares to small investors, potentially being favored over rival brokerage platforms from Robinhood Markets Inc. and SoFi Technologies Inc., Reuters reported, citing two people familiar with the matter. Fannie Mae and Freddie Mac pared a months-long slide after Bill Ackman, who has bet heavily on the companies, called the mortgage-finance giants “stupidly cheap.” Sysco Corp. is acquiring Jetro Restaurant Depot LLC, the closely held wholesaler founded by billionaire Nathan “Natie” Kirsh, for $29.1 billion including debt in a deal that will create one of the largest food-service groups in the US. US regulators have approved a high-dose version of Biogen Inc.’s drug for a rare muscle disorder, giving the company a boost as it competes with a gene therapy from Novartis AG. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 8:13 a.m. Tokyo time Hang Seng futures fell 0.2% Australia’s S&P/ASX 200 fell 0.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1454 The Japanese yen was little changed at 159.84 per dollar The offshore yuan was little changed at 6.9185 per dollar The Australian dollar fell 0.1% to $0.6845 Cryptocurrencies
Bitcoin fell 0.3% to $66,426.62 Ether fell 0.2% to $2,017.43 Bonds
Australia’s 10-year yield declined three basis points to 5.04% Commodities
West Texas Intermediate crude rose 3.1% to $106.08 a barrel Spot gold fell 0.4% to $4,494.67 an ounce This story was produced with the assistance of Bloomberg Automation.
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