Iran Attack Ratchets Up Geopolitical Risks for Traders
Israel's sweeping attack on Iran has sent a jolt through markets and again thrust geopolitical risk front and center for investors. The initial reaction was sharp, with oil prices briefly surging as much as 13%, but the moves cooled throughout the day.
'We are seeing classical risk-off moves,' said Matthew Haupt, portfolio manager at Wilson Asset Management. 'What we are watching now for is the speed and scale of the response from Tehran. That will shape the duration of the current moves. Quite often these moves fade after the initial shocks.'
Here's a round up of more market reaction and analysis:
From the US to Japan, governments are having to pay investors more to get them to lend money by buying bonds, and several countries are pulling back on issuing 50-, 70- and 100-year bonds just a few years after investors couldn't get enough of them. Bloomberg Originals looks at the end of the long bond era.
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Yahoo
25 minutes ago
- Yahoo
World leaders will still talk trade at the G7. They ‘can't afford not to'
President Donald Trump and other heads of state are set to gather in Canada for the annual G7 summit just days after Israel's unprecedented strike on Iran. Ordinarily, such a development would dominate the high-level discussions, but this time around, world leaders will likely need to also focus on another pressing issue: trade. 'You can't afford not to talk about it, from any country's perspective,' said Josh Lipsky, chair of international economics at the Atlantic Council. It's less than a month until July 9, President Donald Trump's self-imposed deadline for when dozens of countries, including several present at the meeting, could face higher tariffs unless they ink trade deals that avert further escalation. If no trade deal has been negotiated before that deadline, it's unclear whether Trump would revert to imposing his so-called 'reciprocal' rates — some of which were as high as 50% — or whether countries could face even higher rates. Trump also raised the possibility of extending the pause even further, though Treasury Secretary Scott Bessent testified last week that may only be offered for countries 'who are negotiating in good faith.' 'They are not going to throw out the [G7] agenda unless the security situation becomes world-threateningly grave,' Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, said, referring to conversations world leaders are likely to have at the summit revolving around trade. Already, the 10% tariff Trump levied on practically every country's exports to the US, and the extra 50% tariff on steel and aluminum and 25% on cars, is starting to take a toll on some foreign countries' economies. For instance, United Kingdom data published last week indicated its economy in April shrank at rates not seen in nearly two years as exports to the US fell by a record amount. And it may only be a matter of time before other economies take a hit, with the World Bank projecting the weakest decade of global economic growth since the 1960s, according to a report the group released last week citing Trump's trade policies as a major catalyst. In particular, the World Bank predicts the US and Europe will suffer some of the sharpest growth declines compared to what it forecast earlier this year as a result of reduced trade and uncertainty regarding tariffs, which are expected to stymie economic activity. There's little doubt every world leader traveling to the summit in the Canadian Rockies would like to depart with a plan to avoid facing higher tariffs. But it's less certain whether that will happen. On a Friday call with reporters previewing Trump's agenda for the summit, a senior US official said trade, among other topics, including international security, will be discussed. 'The president is eager to pursue his goals in all of these areas, including making America's trade relationships fair and reciprocal,' the official said. Already, Japan's Prime Minister Shigeru Ishiba told reporters on Friday his one-on-one meeting with Trump at the summit will center around ongoing trade negotiations. But Lipsky isn't holding his breath for a trade deal announcement with Japan, or any other country present at the meeting. (In addition to leaders from G7 countries — Japan, the US, the UK, France, Germany, Canada and Italy — leaders of the European Union, Australia, India, Brazil, Mexico, South Korea, South Africa and Ukraine will also be attending. 'Even if they're close to one, I don't think it makes sense in front of your colleagues to say, 'Here's the baseline I created with the Trump administration,' and give him that leverage point toward them.' That said, he's anticipating Trump and Ishiba could convey that they're close to finalizing a deal. Discussions with the EU are shaping up to be the biggest wild card. Two weeks ago, Trump threatened to hike tariffs to 50% on EU exports to the US at the start of this month, saying discussions with EU leaders were 'going nowhere.' Then, after speaking with EU Commission President Ursula von der Leyen days later, he backed off. 'Countries would be happy to reach some deal with the US that lowers tariffs and involves some concessions that they can live with,' Obstfeld said. But the EU is 'certainly not going to modify their VAT (value-added tax) to get a deal with US.' Trump has repeatedly demanded the EU abandon these taxes, which he claims unfairly hurt American exports there. Even though Trump will probably meet with France's President Emmanuel Macron, Germany's Chancellor Friedrich Merz and Italy's Prime Minister Giorgia Meloni following their recent visit to the White House, trade isn't likely to be a major topic of discussion with them, given von der Leyen is the lead negotiator, said Lipsky. 'This creates a strange dynamic during the meetings.'
Bloomberg
an hour ago
- Bloomberg
Oil Traders Brace for Turmoil as Iran Crisis Imperils Supply
Oil-watchers are bracing for a further price rally after Israeli strikes on Iranian energy assets heightened the risk to Middle East supplies. Israel temporarily knocked out a natural gas processing facility linked to the giant South Pars field, Iran's biggest, in an attack on Saturday, and targeted fuel storage tanks during strikes as part of its campaign against Tehran's nuclear program.
Yahoo
an hour ago
- Yahoo
Iran's Oil and Gas Assets Rocked in Latest Round of Israeli Attacks
Israel launched a series of airstrikes on Tehran's critical energy infrastructure early Sunday, setting ablaze the city's main gas depot and a major oil refinery, as the conflict with Iran intensified into its most destructive phase yet. The attacks, part of a broader Israeli offensive targeting Iran's energy sector, have heightened fears of a wider regional war and sent ripples through global oil markets. Iran's oil ministry confirmed that the Shahran fuel depot, located in an affluent neighborhood of northern Tehran, was struck, igniting a massive fire that consumed at least 11 storage tanks. Witnesses described a series of explosions that shook the city, with flames visible for miles and smoke engulfing the skyline. 'The fire is terrifying; it's massive,' said Mostafa Shams, a resident near the depot. 'It's the gasoline depots exploding one after another.' In southern Tehran, the Shahr Rey oil refinery, one of Iran's largest, was also hit, according to state media. Emergency crews struggled to contain the blaze, which residents said illuminated the surrounding mountains. The strikes on these facilities, vital for Iran's domestic energy needs and export revenue, mark a significant escalation in Israel's campaign, which began Friday with attacks on Iranian nuclear sites and military targets. Israel's military said its air force targeted 'military assets' in Iran, but Iranian officials accused Israel of deliberately hitting civilian infrastructure. The Shahran depot, with a capacity to hold three days' worth of Tehran's fuel needs, supplies about 8 million liters of gasoline daily, an oil ministry official said. The attacks have raised concerns about potential fuel shortages in the capital, with residents like Shirin, who declined to give her last name for safety reasons, expressing anger at both Israel and Iran's government for failing to protect civilians. The energy strikes follow Israel's Saturday attack on a section of Iran's South Pars Gas Field, one of the world's largest natural gas reserves. 'We have entered the second phase of the war, which is extremely dangerous and destructive,' said Abdollah Babakhani, an Iran energy expert based in Germany. Via New York Times The escalation has roiled global oil markets, with prices surging 8% on Friday as investors braced for further disruptions. Brent crude, the international benchmark, hovered near six-month highs, and analysts expect volatility when markets reopen late Sunday. 'For now, you get spikes in the oil price, but there's no clear sign we're moving toward a no-return scenario,' said Samy Chaar, chief economist at Lombard Odier. He noted that potential disruptions to Iranian oil supplies could be offset by increased output from other producers, but prolonged conflict could challenge central banks' efforts to manage inflation, especially amid U.S. trade tariffs under President Donald Trump. Investors remain cautious, with U.S. stock futures set to resume trading Sunday evening. The Cboe Volatility Index, a measure of market fear, closed at 20.82 on Friday, its highest in three weeks. 'The overall risk profile from the geopolitical situation is too high,' said Alex Morris, chief investment officer at F/m Investments in Washington. The attacks have fueled broader regional tensions. Israel also bombed Yemen overnight, targeting a senior Houthi military leader, while Iran launched about 200 ballistic missiles at Israel, killing eight civilians and injuring dozens, according to Israeli authorities. The Houthis, backed by Iran, fired additional missiles at Israel, further complicating the conflict. The conflict has scuttled U.S.-Iran nuclear talks scheduled for Sunday in Oman, dimming prospects for de-escalation. President Trump, while denying U.S. involvement in Israel's strikes, warned Iran against attacking American interests, promising 'overwhelming force' in response. Russian President Vladimir Putin, in a call with Trump, condemned Israel's actions and offered to mediate, though it's clear Putin's influence in the region is waning. As Tehran grapples with the destruction of its energy infrastructure, residents expressed fear and uncertainty. 'Israel is attacking our livelihood,' Shirin said. 'This is our lives.' By Michael Kern for More Top Reads From this article on
