London (AFP) – Oil prices sank and stock markets jumped Tuesday, even as uncertainty reigned over a potential Israel-Iran ceasefire. In volatile trading, crude futures slumped more than five percent after US President Donald Trump’s declaration of a ceasefire. The oil market went on to reduce its losses, however, as Israel and Iran accused each other of breaking the ceasefire—a claim later confirmed by Trump. The president berated the two sides, adding that he was “really unhappy” with Israel in particular. Despite tensions reigniting, oil prices were still down more than three percent by early afternoon trading in Europe.
“Investors are reacting with relief to apparent news of a US-brokered ceasefire between Iran and Israel,” noted AJ Bell investment director Russ Mould. “Gold slipped back as its safe haven attributes were less in demand,” Mould added, noting that the news weighed on the share prices of oil producers and miners. The dollar retreated against major rivals after Trump once again demanded that the US Federal Reserve cut interest rates to boost the world’s biggest economy. Escalating tensions in the Middle East have shifted some focus away from Trump’s tariff war, which threatens to dampen global economic growth.
In Germany, where the DAX stock index rallied 1.9 percent, Chancellor Friedrich Merz urged Iran and Israel to follow the ceasefire announced by Trump. “We call on both Iran and Israel to heed this call from the American president,” Merz told parliament. “If this ceasefire succeeds…then it will be a very positive development that can make the Middle East and the world safer.” French President Emmanuel Macron commented Tuesday that the situation surrounding Iran remained “volatile and unstable.” There are fears that Iran could shut the Strait of Hormuz, a chokepoint for about one-fifth of the world’s oil supply.
Rystad Energy analyst Jorge Leon told AFP that he believed the risk of the waterway shutting had diminished, despite Iran launching missiles at a US base in Qatar in retaliation for American strikes on Tehran’s nuclear facilities. Trump dismissed the attack as “very weak,” noting that Iran had given “early notice” and that no one was hurt or killed. “I think the risk of closing Hormuz now has diminished rapidly because US and Iranian tension is already over,” Leon argued. “I think it’s more about what happens just between Israel and Iran.”
– Key figures at around 1115 GMT –
West Texas Intermediate: DOWN 3.1 percent at $66.38 per barrel
Brent North Sea Crude: DOWN 3.2 percent at $68.30 per barrel
London – FTSE 100: UP 0.3 percent at 8,786.54 points
Paris – CAC 40: UP 1.2 percent at 7,625.70
Frankfurt – DAX: UP 1.8 percent at 23,686.87
Tokyo – Nikkei 225: UP 1.1 percent at 38,790.56 (close)
Hong Kong – Hang Seng Index: UP 2.1 percent at 24,177.07 (close)
Shanghai – Composite: UP 1.2 percent at 3,420.57 (close)
New York – Dow: UP 0.9 percent at 42,581.78 (close)
Euro/dollar: UP at $1.1596 from $1.1581 on Monday
Pound/dollar: UP at $1.3606 from $1.3526
Dollar/yen: DOWN at 145.06 yen from 146.12 yen
Euro/pound: DOWN at 85.22 pence from 85.60 pence
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© 2024 AFP
