The Dow Industrials slid 1.6%, nearly 800 points, while U.S. crude jumped 8.5% to $81.01 a barrel, its highest price since July 2024 and its biggest one-day jump since 2020. Brent crude, the global benchmark, climbed above $85.

The Dow dropped 785 points, or 1.6%. A late rebound lifted the index from an 1,100-point hole. The S&P 500 fell 0.6%. The Nasdaq Composite dropped 0.3%.

West Texas Intermediate crude oil futures spiked 8.5% to $81.01 a barrel, which is its biggest one-day percentage gain since May 14, 2020, and its highest settlement since July 18, 2024, according to Dow Jones Market Data. Brent crude oil futures, the international benchmark, rose 4.9% to $85.41 a barrel.

Mumbai: The Indian rupee could trade firmly below ’92 per dollar if the US-Israel war on Iran is prolonged. Rising oil prices and its impact on the fiscal deficit could also have a 0.2% to 0.4% impact on inflation, Bank of Baroda economists said in a webinar. Economists expect a 0.5% impact on India’s GDP due to higher crude prices assuming that there is a 10% rise in the commodity’s prices.

“It all depends on how long this war will last. If it is long drawn, there will be an impact on growth because of issues linked to supply, then there will also be an impact on the external trade and exports,” said Madan Sabnavis, chief economist at Bank of Baroda.

The bank still expects the rupee to trade in the Rs 91 per dollar to Rs 92 per dollar band.
On Friday, the rupee ended at 91.74/$1, down 14 paise from its previous close of 91.60/$1, despite strong intervention by the Reserve Bank of India in both the spot market as well as the offshore non deliverable forwards market. It had sunk to a record low of 92.30/$1 on Wednesday due to heightened pressures from geopolitical crisis. For India, which imports more than 89% of its crude, the supply disruption could impact the financial markets and real economy, as 60% of India’s crude passes through the Gulf of Hormuz.

Mumbai: Morgan Stanley has downgraded India to ‘equal weight‘ within Asia and Emerging Markets, citing the uncertainty around geopolitical developments and oil supply risks. The brokerage said it remains overweight on Japan, Brazil and Singapore.

“While significant uncertainty remains about the path forward, from a markets perspective, we believe developments in the Middle East remain in an escalation phase and warrant ongoing caution,” said Morgan Stanley’s strategists, including Jonathan Garner, in a note to clients.

The brokerage said India’s improved macroeconomic stability position leaves it less exposed to higher oil prices than historically, but concerns around the fallout of the AI-related disruptions remain. “With uncertainty also still swirling around AI disruption and absolute valuations still expensive, we expect it will take some time – and potentially a peak in the tech cycle for Korea and Taiwan -before international investors reposition towards India,” said Morgan Stanley.

The brokerage said India, Thailand, Korea and Taiwan would be more exposed to growth risks on account of their wider oil and gas balances, while the Philippines, Indonesia and India may face some pressures from wider current account deficits.

“Asia/ EM equities stand at a crucial juncture here, with a baseline of multi-week shipping disruption and uncertainty, and risks of an escalation scenario featuring disruptions more acute than 2022 (which were more concentrated in European energy markets),” said Morgan Stanley. The brokerage said MSCI Asia Pacific fell by 16% between March and July 2022 in the wake of the Russia-Ukraine conflict and energy market impacts, before stabilising briefly, and then falling further amid a global equity correction and tech down-cycle.