Oil edges down, stocks mixed but Mideast war fears elevated
HONG KONG - Oil prices slipped Wednesday following the previous day's surge but investors remained on edge fearing a US intervention in the Israel-Iran conflict after Donald Trump called for Tehran's "unconditional surrender".
Iran and Israel exchanged missile strikes for a sixth day, with the US president's latest comments appearing to dent hopes that the crisis in the Middle East could be calmed.
Leaving the G7 summit in Canada a day early on Monday, Trump said he was aiming for a "real end" to the conflict, not just a ceasefire.
He later shared a series of social media posts that stoked speculation he could be planning to join Israel in its strikes on Iranian military and nuclear sites.
Days after a senior US official said Trump had told Israel to back down from plans to assassinate top leader Ayatollah Ali Khamenei, Trump looked to reverse course.
"We know exactly where the so-called 'Supreme Leader' is hiding. He is an easy target, but is safe there - We are not going to take him out (kill!), at least not for now," he wrote on his Truth Social platform.
Warning Iran against targeting US interests, he also posted: "But we don't want missiles shot at civilians, or American soldiers. Our patience is wearing thin."
And in a later post wrote: "UNCONDITIONAL SURRENDER!"
The comments sent oil prices spiking more than 4% Tuesday on fears an escalation of the conflict could hammer supplies from the crude-rich region.
But while both main contracts slipped Wednesday, investors remain on edge over any negative developments.
Of particular concern is the possibility of Iran shutting off the Strait of Hormuz, through which around an estimated fifth of global oil supply traverses, according to a Commerzbank note.
"Iran is reportedly ready to target US regional bases should Trump greenlight strikes on Iranian nuclear facilities," said Stephen Innes at SPI Asset Management.
"Washington's refuelling jets are already en route, and if Fordow gets hit, expect the Strait of Hormuz to become a maritime minefield, Houthi drones to swarm Red Sea shipping lanes, and every militia from Basra to Damascus to light up American forward outposts."
Equity markets Hong Kong, Sydney, Singapore, Mumbai, Wellington, Bangkok, Manila and Jakarta all sank, though Tokyo, Seoul and Taipei edged up.
London gained in the morning even as data showed UK inflation slowed less than expected in May.
Paris and Frankfurt also rose.
The mixed day in Asian stocks followed a weak day on Wall Street, where a below-forecast reading on US retail sales for May - dragged by a slowdown in auto sales - revived fresh worries about the world's top economy. That came as another report showed factory output fell unexpectedly.
Still, they did provide a little hope the Federal Reserve will eventually cut interest rates, with traders betting on two by the end of the year, according to Bloomberg News.
Investors will be keeping track of the bank's latest meeting as it concludes later in the day, with most observers predicting it will stand pat.
However, it is also due to release its rate and economic growth outlook for the rest of the year, which are expected to take account of the impact of Trump's tariff war.
"The Fed would no doubt be cutting again by now if not for the uncertainty regarding tariffs and a recent escalation of tensions in the Middle East," said KPMG senior economist Benjamin Shoesmith.
KEY FIGURES AT AROUND 0810 GMT
West Texas Intermediate: DOWN 0.4% at $74.54 per barrel
Brent North Sea Crude: DOWN 0.6% at $76.01 per barrel
Tokyo - Nikkei 225: UP 0.9% at 38,885.15 (close)
Hong Kong - Hang Seng Index: DOWN 1.1% at 23,710.69 (close)
Shanghai - Composite: FLAT at 3,388.81 (close)
London - FTSE 100: UP 0.2% at 8,850.28
Euro/dollar: UP at $1.1517 from $1.1488 on Tuesday
Pound/dollar: UP at $1.3460 from $1.3425
Dollar/yen: DOWN at 144.99 yen from 145.27 yen
Euro/pound: UP at 85.56 pence from 85.54 pence
New York - Dow: DOWN 0.7% at 42,215.80 (close)
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HONG KONG - Oil prices slipped Wednesday following the previous day's surge but investors remained on edge fearing a US intervention in the Israel-Iran conflict after Donald Trump called for Tehran's "unconditional surrender". Iran and Israel exchanged missile strikes for a sixth day, with the US president's latest comments appearing to dent hopes that the crisis in the Middle East could be calmed. Leaving the G7 summit in Canada a day early on Monday, Trump said he was aiming for a "real end" to the conflict, not just a ceasefire. He later shared a series of social media posts that stoked speculation he could be planning to join Israel in its strikes on Iranian military and nuclear sites. Days after a senior US official said Trump had told Israel to back down from plans to assassinate top leader Ayatollah Ali Khamenei, Trump looked to reverse course. "We know exactly where the so-called 'Supreme Leader' is hiding. He is an easy target, but is safe there - We are not going to take him out (kill!), at least not for now," he wrote on his Truth Social platform. Warning Iran against targeting US interests, he also posted: "But we don't want missiles shot at civilians, or American soldiers. Our patience is wearing thin." And in a later post wrote: "UNCONDITIONAL SURRENDER!" The comments sent oil prices spiking more than 4% Tuesday on fears an escalation of the conflict could hammer supplies from the crude-rich region. But while both main contracts slipped Wednesday, investors remain on edge over any negative developments. Of particular concern is the possibility of Iran shutting off the Strait of Hormuz, through which around an estimated fifth of global oil supply traverses, according to a Commerzbank note. "Iran is reportedly ready to target US regional bases should Trump greenlight strikes on Iranian nuclear facilities," said Stephen Innes at SPI Asset Management. "Washington's refuelling jets are already en route, and if Fordow gets hit, expect the Strait of Hormuz to become a maritime minefield, Houthi drones to swarm Red Sea shipping lanes, and every militia from Basra to Damascus to light up American forward outposts." Equity markets Hong Kong, Sydney, Singapore, Mumbai, Wellington, Bangkok, Manila and Jakarta all sank, though Tokyo, Seoul and Taipei edged up. London gained in the morning even as data showed UK inflation slowed less than expected in May. Paris and Frankfurt also rose. The mixed day in Asian stocks followed a weak day on Wall Street, where a below-forecast reading on US retail sales for May - dragged by a slowdown in auto sales - revived fresh worries about the world's top economy. That came as another report showed factory output fell unexpectedly. Still, they did provide a little hope the Federal Reserve will eventually cut interest rates, with traders betting on two by the end of the year, according to Bloomberg News. Investors will be keeping track of the bank's latest meeting as it concludes later in the day, with most observers predicting it will stand pat. However, it is also due to release its rate and economic growth outlook for the rest of the year, which are expected to take account of the impact of Trump's tariff war. "The Fed would no doubt be cutting again by now if not for the uncertainty regarding tariffs and a recent escalation of tensions in the Middle East," said KPMG senior economist Benjamin Shoesmith. KEY FIGURES AT AROUND 0810 GMT West Texas Intermediate: DOWN 0.4% at $74.54 per barrel Brent North Sea Crude: DOWN 0.6% at $76.01 per barrel Tokyo - Nikkei 225: UP 0.9% at 38,885.15 (close) Hong Kong - Hang Seng Index: DOWN 1.1% at 23,710.69 (close) Shanghai - Composite: FLAT at 3,388.81 (close) London - FTSE 100: UP 0.2% at 8,850.28 Euro/dollar: UP at $1.1517 from $1.1488 on Tuesday Pound/dollar: UP at $1.3460 from $1.3425 Dollar/yen: DOWN at 144.99 yen from 145.27 yen Euro/pound: UP at 85.56 pence from 85.54 pence New York - Dow: DOWN 0.7% at 42,215.80 (close)
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