Business
Global Market Today: Asian stocks count on AI boom to offset Gulf risks
“While uncertainties remain, the acute risk phase for the global economy should be over if tankers can begin moving again,” said Michael Feroli, head of U.S. economics at JPMorgan.
“Still, not everything would return to its pre-conflict place – oil prices are likely to remain elevated for some time, as inventories get rebuilt and the supply infrastructure in the Middle East is repaired.”
Indeed, the lack of news nudged Brent up 1.9% to $92.89 a barrel, while U.S. crude added 2.4% to $89.46.
Asian share markets remain underpinned by demand for semiconductors and AI-related gear, with Japan’s Nikkei up a further 0.5%, having risen almost 5% last week to all-time highs.
South Korea rose 1.3%, after surging 8% last week, while Taiwan climbed almost 6% last week. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2%.
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For Europe, EUROSTOXX 50 futures dipped 0.3%, while DAX futures eased 0.2% and FTSE futures lost 0.5%.
S&P 500 futures were up 0.2%, while Nasdaq futures firmed 0.4% after hitting records last week.
Yet the gains have been narrowly based with the AI-linked big 10 companies making up 40% of the S&P 500 and only 21 stocks of the 500 making record highs. While tech stocks climbed almost 16% in May, consumer discretionary and healthcare managed little more than 2%, and consumer staples lost more than 3%.
The inflationary pulse from oil continues to hamper bond markets as U.S. 10-year yields rose 3 basis points to 4.470%. Markets imply a 50-50 chance the Federal Reserve will have to hike rates by year-end to prevent rising prices from getting baked into inflationary expectations.
A host of Fed members are set to speak this week, while major data include the ISM survey of manufacturing and the May payrolls report on Friday.
Market forecasts are for a solid rise of 85,000 in employment, keeping the jobless rate steady at 4.3%. Anything stronger would likely see the odds of a hike narrow further.
The market’s hawkish outlook has kept the dollar broadly steady, with the Japanese yen and the euro hampered by those regions’ reliance on energy imports.
The dollar was a shade firmer on the yen at 159.42 , but bulls were wary of risking Japanese intervention on a break of the 160.00 barrier.
The euro stood at $1.1645, having spent the past week hemmed in between $1.1585 and $1.1661.
In commodity markets, gold was little changed at $4,535 an ounce, having found little support as a safe haven or as a hedge against inflation.
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Business
Oil Price Today (June 22): Crude oil rises above $80 as Iran shuts Strait of Hormuz again. What are experts saying?
Reuters reported that shipping data showed a sharp decline in the number of vessels passing through the Strait of Hormuz on Sunday after Iran announced it had once again closed the waterway, accusing Israel and the United States of violating the interim peace agreement.
Crude oil price on June 22
Brent crude futures rose 54 cents, or 0.67%, to $81.11 a barrel, after briefly touching $82.30 at the start of trading. U.S. West Texas Intermediate (WTI) crude futures gained $2.02, or 2.64%, to $78.62 a barrel ahead of the contract’s expiry later on Monday. The more actively traded August contract advanced $1.43 to $77.28 a barrel. U.S. markets were closed on Friday due to a holiday, resulting in no settlement.
Adding to market uncertainty, U.S. President Donald Trump threatened to resume attacks on Iran, even as U.S. Vice President JD Vance met Iranian officials on Sunday for the first discussions under the interim deal. Tehran, meanwhile, said Washington had failed to honour its commitment to halt fighting in Lebanon.
Also read: Global Market Today: Asian stocks slip, oil up on peace doubts
In Lebanon, Israeli strikes killed at least 20 people on Saturday, according to the state news agency NNA. The attacks came a day after a ceasefire with Hezbollah took effect in an effort to stop months of escalating violence.
Despite Monday’s gains, oil prices had fallen more than 8% last week amid expectations that cargoes stranded inside the Gulf would be released and that U.S. sanctions on Iranian oil could eventually be lifted under a U.S.-Iran agreement.
Where are prices headed?
Despite the recent slide in oil prices, a complete reopening of Hormuz is expected to be a complex process. It will require careful coordination of vessel movements, the restart of oil wells, repairs to infrastructure and agreement on de-mining operations. Some shipowners also remain wary of operating conditions in the strait and the wider Persian Gulf.
Analysts note that global oil inventories were depleted during the extended disruption of shipping through the Strait of Hormuz and will take time to rebuild. Stockpiles could continue falling before fresh Gulf supplies begin reaching international markets.Last month, Saudi Aramco Chief Executive Officer Amin Nasser cautioned that disruptions in the Strait of Hormuz could delay a return to stability in global oil markets until 2027. According to Nasser, prolonged interruptions could affect nearly 100 million barrels of oil supply each week. Saudi Aramco remains the world’s largest oil producer.
Morgan Stanley described the oil market as being in “a race against time,” warning that some of the factors that have limited the rise in prices could weaken if the Strait of Hormuz remains closed through June.
The brokerage noted that higher U.S. crude exports and softer Chinese demand have so far helped absorb part of the supply shock. However, it cautioned that global supplies could tighten again if disruptions in the strategic shipping route continue, particularly beyond the period during which the U.S. and China are able to cushion the impact.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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