Global Markets React to Ongoing Iran Conflict as Oil Prices Surge
Market Overview Amid Rising Oil Prices
Hong Kong: Global stock markets displayed mixed results on Friday following a downturn on Wall Street, while oil prices continued their upward trend, reaching levels not seen in nearly two years.
US futures experienced a decline as the conflict with Iran entered its seventh day, with Israeli airstrikes targeting both Iran and Lebanon's capitals. The S&P 500 futures fell by 0.3%, and the Dow Jones Industrial Average futures decreased by 0.2%.
In early trading across Europe, the UK's FTSE 100 saw a slight increase of 0.1%, reaching 10,423.95. Conversely, Germany's DAX dropped by 0.2% to 23,775.35, and France's CAC 40 also fell by 0.2% to 8,030.10.
Asian markets showed varied results, with South Korea's Kospi inching up less than 0.1% to 5,584.87 after a tumultuous week that included a record 12% loss on Wednesday followed by a nearly 10% recovery on Thursday. The index had previously surpassed 6,000 before the onset of the conflict began to unsettle financial markets.
Tokyo's Nikkei 225 index rose by 0.6% to 55,620.84, while Hong Kong's Hang Seng surged by 1.7% to 25,757.29. The Shanghai Composite index also saw a 0.4% increase, reaching 4,124.19. However, Australia's S&P/ASX 200 fell by 1% to 8,851.00, and Taiwan's Taiex decreased by 0.2%, with India's Sensex down by 0.8%.
Oil prices have been on the rise again after a brief dip earlier in the week, driven by concerns over production and supply due to the ongoing conflict with Iran. Benchmark US crude jumped by 4.1% to USD 84.36 per barrel, while Brent crude, the international benchmark, increased by 1.7% to USD 87 per barrel, nearing its highest point since April 2024.
Should oil prices continue to escalate, potentially reaching USD 100 per barrel, analysts warn that this could negatively impact global economic growth. The uncertainty surrounding the conflict has led to significant fluctuations in financial markets this week.
Before the recent surge in oil prices, analysts from ING noted that a temporary 30-day waiver from the US allowing Indian refiners to purchase Russian oil had briefly eased crude prices. They indicated that while this is not a major shift, it reflects US efforts to stabilize oil prices.
The future of oil prices will depend on the resumption of oil flows through the Strait of Hormuz, which has faced disruptions due to tanker activities. This waterway is crucial, as it is estimated that about one-fifth of the world's seaborne oil passes through it.
On Thursday, the S&P 500 fell by 0.6%, and the Dow industrials dropped by 1.6%, while the Nasdaq composite decreased by 0.3%. Airline stocks were particularly hard hit, as rising oil prices increased fuel costs, leaving many passengers stranded across the Middle East due to the ongoing conflict.
American Airlines shares fell by 5.4%, United Airlines dropped by 5%, and Delta Air Lines saw a decline of 3.9%.
In other market movements early Friday, the US dollar rose to 157.84 Japanese Yen from 157.56 Yen, while the euro decreased to USD 1.1582 from USD 1.1611.