New York (AFP) – Oil prices jumped and stocks mostly fell Tuesday after President Donald Trump abruptly departed G7 talks and concerns rose over a possible US intervention in the Israel-Iran war. Investors’ optimism the previous day that the conflict would not spread throughout the Middle East gave way to fears of further escalation as the fighting entered its fifth day.
“Middle East tensions are showing no signs of easing back, putting investors on high alert,” said Russ Mould, investment director at AJ Bell. Trump said he was aiming for a “real end” to the conflict, not just a ceasefire after he departed the G7 summit in Canada. In social media posts, Trump appeared to demand Iran’s “UNCONDITIONAL SURRENDER!” while hinting at a possible US intervention to assist Israel.
After spending all of Monday in positive territory, US indices were in the red throughout Tuesday’s session. The S&P 500 finished down 0.8 percent. Contributing to the selling was a disappointing US retail sales report that suggested shoppers pulled back in May after accelerating purchases the prior months in anticipation of tariffs.
European equities ended the day lower, while Asia turned in a mixed performance: Hong Kong fell, while Shanghai was flat and Tokyo advanced. Despite mounting calls to de-escalate, neither side has backed off from the missile blitz that began Friday when Israel targeted Iranian nuclear and military facilities.
Oil prices surged more than four percent on Tuesday after swinging between gains and losses since Friday’s initial surge. Analysts have said the oil market is currently “sufficiently supplied,” as Commerzbank noted. However, the Iran-Israel conflict has the oil market on edge because of the significance of the Strait of Hormuz, through which around an estimated fifth of global oil supply traverses, according to the Commerzbank note.
Investors are looking ahead to the US Federal Reserve’s decision on Wednesday, with policymakers expected to hold steady interest rates. Dealers also kept tabs on the G7 summit, where world leaders pushed back against Trump’s trade war, arguing it posed a risk to global economic stability. Britain, Canada, Italy, Japan, Germany, and France called on Trump to reverse course on his plans to impose even steeper tariffs on countries across the globe next month.
“Trump leaving the summit early means the prospects of any more deals look slim in the days ahead,” said City Index and FOREX.com analyst Fawad Razaqzada. The dollar advanced against the euro and other currencies, evidence of a revived flight to safety impetus among traders due to Middle East uncertainty.
– Key figures at around 2030 GMT –
Brent North Sea Crude: UP 4.4 percent at $76.45 per barrel
West Texas Intermediate: UP 4.3 percent at $74.84 per barrel
New York – Dow: DOWN 0.7 percent at 42,215.80 (close)
New York – S&P 500: DOWN 0.8 percent at 5,982.72 (close)
New York – Nasdaq Composite: DOWN 0.9 percent at 19,918.28 (close)
London – FTSE 100: DOWN 0.5 percent at 8,834.03 (close)
Paris – CAC 40: DOWN 0.8 percent at 7,683.73 (close)
Frankfurt – DAX: DOWN 1.1 percent at 23,434.65 (close)
Tokyo – Nikkei 225: UP 0.6 percent at 38,536.74 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 percent at 23,980.30 (close)
Shanghai – Composite: FLAT at 3,387.40 (close)
Euro/dollar: DOWN at $1.1488 from $1.1561 on Monday
Pound/dollar: DOWN at $1.3425 from $1.3578
Dollar/yen: UP at 145.27 yen from 144.75 yen
Euro/pound: UP at 85.54 pence from 85.14 pence
burs-jmb/dw
© 2024 AFP
