New York (AFP) – Oil prices rose on Wednesday, edging closer to $100 a barrel while stocks fell as further attacks between the United States and Iran dented hopes of an imminent peace deal. Wall Street indexes tumbled and European stocks were mostly in the red, following a mixed showing in Asia. The dollar firmed as oil prices flared amid the Middle East escalations despite a supposed ceasefire, with a drone strike on a passenger terminal in Kuwait’s international airport killing one person and wounding dozens of others.
“Oil prices continue to make headway after the overnight strikes on Kuwait, and once more it is hitting most markets save for technology,” said IG chief market analyst Chris Beauchamp. He said the situation was shifting from a delicate ceasefire towards something more like a low-intensity conflict. On Wednesday, Iranian Foreign Minister Abbas Araghchi said “no tangible progress” had been made in talks to end the war. “This simply leaves the vital issue of oil supplies unresolved, and the clock continues to tick down towards doomsday for oil inventories and the global economy,” Beauchamp added.
The war has hit economic growth prospects worldwide, with a more severe shock likely should no effective ceasefire be agreed before 2027, the OECD warned Wednesday. Global economic growth is forecast to slip to 2.8 percent this year even if Gulf energy exports return to pre-conflict levels in the third quarter, the group of 38 industrialized countries said in its quarterly update. “The longer the disruptions last, the larger the economic and social costs become,” said OECD chief economist Stefano Scarpetta. Many countries would risk falling into recession, he noted, and a drop in investment spending — “including in energy-intensive AI” — would likely push up unemployment.
AI enthusiasm has in general sustained investor sentiment, helping drive Wall Street indexes to repeated record highs in recent months. Tuesday was no exception, with US chipmaker Marvell Technology soaring 32 percent after Nvidia CEO Jensen Huang hailed it as the next trillion-dollar firm. However, there was a bit of profit-taking on Wednesday. Tom Cahill of Ventura Wealth Management said it was natural for the market, which has done well in the past month or so, to “consolidate or move sideways a little bit to digest some of those gains.” But geopolitical angst was likely weighing on stocks, he added.
Two pieces of data helped keep risk sentiment from souring: activity in the US services sector expanded in May and private sector employment grew more than expected. The data comes ahead of US employment data due Friday that could determine if the Federal Reserve will keep its benchmark rate stable or potentially hike borrowing costs to fight inflation. In Asia, the yen briefly strengthened amid speculation that the Japanese authorities could step in to support the currency following last month’s intervention, before giving up its gains against the dollar. Tokyo’s index closed up more than two percent, helped by a surge in the share price of chipmaker Tokyo Electron. Taipei was up two percent thanks to Taiwan Semiconductor Manufacturing Company’s strong advance.
– Key figures at around 2015 GMT –
Brent North Sea Crude: UP 1.9 percent at $97.81 a barrel
West Texas Intermediate: UP 2.4 percent at $96.02 a barrel
New York – DOW: DOWN 1.2 percent at 50,687.07 points (close)
New York – S&P 500: DOWN 0.7 percent at 7,553.68 (close)
New York – Nasdaq Composite: DOWN 0.9 percent at 26,853.98 (close)
London – FTSE 100: DOWN 0.4 percent at 10,332.30 (close)
Paris – CAC 40: DOWN 0.7 percent at 8,150.42 (close)
Frankfurt – DAX: DOWN 1.3 percent at 24,795.94 (close)
Tokyo – Nikkei 225: UP 2.5 percent at 68,402.13 (close)
Hong Kong – Hang Seng Index: DOWN 1.6 percent at 25,633.21 (close)
Shanghai – Composite: UP 0.2 percent at 4,083.97 (close)
Euro/dollar: DOWN at $1.1599 from $1.1634 on Tuesday
Pound/dollar: DOWN at $1.3420 from $1.3470
Dollar/yen: UP at 160.07 yen from 159.92 yen
Euro/pound: UP at 86.43 pence from 86.37 pence
© 2024 AFP
