Investors on edge over Israel-Iran conflict, oil price volatility
Wary investors move to "risk off" mode as geopolitical tension mounts
Crude oil prices spike higher on outbreak of hostilities
US VIX volatility measure at highest point in 3 weeks
(Updates Saturday story with comment, details)
By Saqib Iqbal Ahmed, Suzanne McGee and Linda Pasquini
NEW YORK/GDANSK, June 14 (Reuters) -
Investors were on edge ahead of markets reopening late on Sunday, with risks ranging from heightened prospects of a broad Middle East war to U.S.-wide protests against President Donald Trump that threatened more domestic chaos.
Israel and Iran launched fresh attacks on each other into Sunday, with Prime Minister Benjamin Netanyahu saying Israeli strikes would intensify as Tehran called off nuclear talks that Washington had held out as the only way to halt the bombing.
Meanwhile, Yemen's Iran-aligned Houthis joined the fray.
Oil prices rose by 7% on Friday, as Israel and Iran traded strikes, and investors will be watching closely to see how the price reacts when markets open later.
"So far we are at a stage of 'controlled confrontation'", said Lombard Odier's chief economist Samy Chaar, where it is too soon to call for real and persistent economic damage despite high risk.
"For now, you get spikes in the oil price, you get volatility, everyone's a bit nervous, but there is no clear sign that we're moving towards the no-return type of scenario," he said.
On Saturday, Israel appeared to have also hit Iran's oil and gas industry for the first time, with Iranian state media reporting a blaze at a gas field.
Israel's air offensive against Iran that began early on Friday, killing commanders and scientists and bombing nuclear sites in a stated bid to stop Tehran building an atomic weapon, knocked risky assets including stocks, on Friday. It also lifted oil prices and prompted a rush into gold and the dollar, which resumed its role as a safe-haven asset for the first time in months.
Oil prices at close to six-month highs could pose a risk to the inflation outlook, as central banks around the world grapple with the impact on prices from Trump's trade tariffs and the effect on economic growth.
Lombard Odier's Chaar said a spike in oil prices should not in theory derail monetary policy for now, as possible disruption to Iranian oil supplies could be partly offset by output rises elsewhere.
"It seems to me that long gone are the days when a central bank would hike rates because of a spike in the oil prices," Chaar said, adding that policymakers will more likely stay focused on economic fundamentals and demand drivers.
Investors are nervous though, and the S&P 500 appears to have stalled after rallying about 20% from its trade war-induced April low to near record highs.
"The overall risk profile from the geopolitical situation is still too high for us to be willing to rush back into the market," said Alex Morris, chief investment officer of F/m Investments in Washington.
, organised by the "No Kings" coalition to oppose
of two Minnesota state lawmakers on Saturday, added to downbeat sentiment.
U.S. stock futures are set to resume trading at 6 p.m. (2200 GMT) on Sunday.
With risky assets sinking, investors' expectations for near-term stock market gyrations jumped.
The Cboe Volatility Index, often called the Wall Street "fear index", rose 2.8 points to finish at 20.82 on Friday, its highest close in three weeks.
Michael Thompson, co-portfolio manager at boutique investment firm Little Harbor Advisors, said he would be watching near-term volatility futures prices for any rise toward or above the level for futures set to expire months from now.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
36 minutes ago
- Mint
Israel's war on Iran is costing hundreds of millions of dollars a day
Israel faces steep costs to repair hundreds of buildings damaged in Iranian missile strikes, including in Tel Aviv. Israel's conflict with Iran is costing the country hundreds of millions of dollars a day, according to early estimates, a price tag that could constrain Israel's ability to conduct a lengthy war. The biggest single cost are the interceptors needed to blow up incoming Iranian missiles, which alone can amount to between tens of millions to $200 million a day, experts say. Ammunition and aircraft also add to the price tag of the war, as does the unprecedented damage to buildings. Some estimates so far say that rebuilding or repairing damage could cost Israel at least $400 million. The mounting costs add up to pressure on Israel to wrap up the war quickly. Israeli officials have said the new offensive could last for two weeks, and Israeli Prime Minister Benjamin Netanyahu has shown no indication of stopping before Israel achieves all of its goals, which include the elimination of Iran's nuclear program and its ballistic-missile production and arsenal. But the war is expensive. 'The main factor which will really determine the cost of the war will be the duration," said Karnit Flug, a former governor of the Bank of Israel and now a senior fellow at the Jerusalem-based think tank Israel Democracy Institute. Flug said she thought Israel's economy could sustain a short campaign. 'If it is a week it is one thing," she said. 'If it is two weeks or a month it is a very different story." An interceptor responds to an incoming missile this week in the skies above Tel Aviv. Over the last few days, Iran has launched more than 400 missiles at Israel, according to the Israeli government, which require sophisticated air-defense systems to stop. More missiles usually means more interceptors. The David's Sling system, developed jointly by Israel and the U.S., can shoot down short-to-long range missiles, drones and aircraft. It costs around $700,000 each time it is activated, assuming it uses two interceptors, normally the minimum launched, according to Yehoshua Kalisky, a senior researcher at the Tel Aviv-based Institute for National Security Studies. Arrow 3, another system being used, shields against long-range ballistic missiles that leave the earth's atmosphere, at a cost of around $4 million per interception, Kalisky said. An older version of the Arrow, known as Arrow 2, costs around $3 million per interceptor. Other military expenditures include the cost of keeping dozens of warplanes, such as F-35 jets, in the air for hours at a time some 1,000 miles away from Israeli territory. Each costs around $10,000 per hour of flight time, according to Kalisky. The cost of refueling jets, and ammunition including bombs such as JDAMs and MK84s, also must be factored in. 'Per day it is much more expensive than the war in Gaza or with Hezbollah. And it all comes from the ammunition. That's the big expense," said Zvi Eckstein, who heads the Aaron Institute for Economic Policy at Reichman University in Israel, referring to both defensive and offensive munitions. According to an estimate by the institute, a war with Iran that lasts one month will amount to around $12 billion. The arrivals hall at Ben Gurion Airport near Tel Aviv was largely empty on June 13 after Israel closed its airspace to takeoffs and landings. Israeli military spending has gone up since the war began yet economists don't foresee a recession at this point, Eckstein said. Much of Israel's economy has shut down in recent days as a result of the Iranian strikes. Only workers in essential industries were called to work, and many businesses such as restaurants were closed. The country's main international airport was closed for several days and has now opened for limited flights back to Israel for those stuck abroad. On June 16, S&P released a risk assessment for the Israel-Iran escalation but didn't change its credit outlook. Israeli markets rose to record highs Wednesday, continuing to outperform U.S. benchmarks despite the conflict with Iran, betting that the war will end in Israel's favor. Some economists say that the markets appear to think that Israel's economy will prove resilient as it has demonstrated over the past 20 months of war in Gaza. Still, the damage inflicted by Iranian missile attacks will add up. Engineers say that the destruction caused by the large ballistic missiles is unlike anything they have seen in recent decades of war in Israel. Hundreds of buildings have been destroyed or heavily damaged, and they will cost hundreds of millions of dollars to rebuild or repair, said Eyal Shalev, a structural engineer who has been called to assess the damage to civilian infrastructure. Shalev estimated it would cost at least tens of millions of dollars to repair a single newly-built skyscraper in central Tel Aviv, which was affected by the strikes. More than 5,000 people have been evacuated from their homes because of missile damage, and some are being housed in hotels paid for by the state, according to Israel's National Public Diplomacy Directorate. Targeting of critical infrastructure has been a top concern in Israel. Two strikes on Israel's largest oil refinery in northern Israel led to its shutdown and killed three of the refinery's employees. Some employees who work in sensitive or critical infrastructure industries have been told in recent days not to come to work, according to Dror Litvak, CEO of ManpowerGroup Israel, which supplies over 12,000 employees in Israel to different sectors. On Wednesday, Israel's home front command said it would partially lift a ban on gatherings—allowing up to 30 people in total to meet—and that workplaces in much of the country could reopen as long as there is a nearby shelter. But with schools still closed, many parents are struggling to juggle working from home and entertaining their children amid yet another military campaign. Ariel Markose, 38 years old, a chief strategy officer for an Israeli nonprofit, now holds her morning work calls from a park in Jerusalem where she spends several hours with her four young children. She heads home at around 4 p.m. and continues to work while her husband takes over with the children. 'There are families that are completely collapsing under this," she said. Iranian missiles have hit critical Israeli infrastructure, and some homes have been damaged, as in Ramat Gan. Write to Anat Peled at
Time of India
38 minutes ago
- Time of India
Tea trade disrupted: Iran-Israel war halts exports; Kolkata shipments pile up
KOLKATA: The Iran-Israel conflict has brought to a standstill all tea exports to Iran, the second-largest recipient of Indian tea after Russia. Consignments that have already left the city for Iran are now piled up at Mumbai's Nhava-Sheva port. The sudden break has come at a time tea exports to Iran saw a major revival in 2024 after a muted 2023. Last year, Indian tea exports to Iran grew five-fold to 31 million kg from 5.9 million kg in 2023, when US sanctions against Iran had led to a sharp drop. In 2022, the export figure was 22 million kg. Iran has a 20% share of India's total tea exports, say officials. 'Every year, we export 5 million kg of tea to Iran. But our consignments are lying in Nhava-Sheva since June 14 as the shipping route to Iran is temporarily suspended because of the war,' said Sashi Kanta Shah, chairman of Shah Brother, one of the leading tea exporters in the city. Indian Tea Association chairman Hemant Bangur said exporters were also holding back shipments because they were unsure of payments. At the same time, Iranian importers were also buying time because they were also not sure if they could make payments. Iran primarily imports tea produced in Assam, Darjeeling and Dooars. Assam has the largest share — 80% — of the export basket with the rest being contributed by Bengal. Kolkata is the hub of tea export in north India. 'Orthodox tea grown in Assam and Dooars has a big market in Iran. Besides, high-quality CTC (crush, tear, and curl) tea is also sent there along with Darjeeling tea. Assam tea is blended and packaged in Kolkata before being exported,' said Bijoy Gopal Chakraborty, president of Confederation of India Small Tea Growers Association. Exporters are racing to fulfil pending orders before freight costs further skyrocket, said Anindya Sengupta, co-founder of Small Tea Growers Associates, a city-based manufacturing company. 'The import volume of Iran has already declined while the war has turned the situation for the worse. We are now focusing on the UK and Europe markets,' he added. Sujit Patra, former secretary of Indian Tea Association, said earlier Iran used to import higher quantities of premium Darjeeling tea. 'With the price of Darjeeling tea rising, they have shifted more to the Assam variety and Dooars tea. Exporters from Kolkata primarily use the Mumbai port to send shipments to Iran,' he said.
&w=3840&q=100)
Business Standard
44 minutes ago
- Business Standard
Stock Market LIVE: GIFT Nifty flat; Asia mixed; China holds lending rates
Sensex Today | Stock Market LIVE on Friday, June 20, 2025: At 6:50 AM, GIFT Nifty futures were trading 3 points lower at 24,800, indicating a flat start for the bourses. 7:11 AM Stock Market LIVE Updates: Siemens Energy: The power play that doesn't overload on valuations Stock Market LIVE Updates: Siemens Energy India listed on Thursday at ₹2,840 and closed at ₹2,735. The equity base of the demerged entity is 356 million shares. This arm of Siemens Group will provide integrated products, solutions, and services across the value chain of oil and gas, power generation, and transmission. It may be described as an energy transition and decarbonisation play. It has 10 state-of-the-art facilities in India and exclusive business rights across South Asia from the group. The estimated transmission and distribution (T&D) capital expenditure (capex) in India alone is projected to be about ₹9.2 trillion until 2031-32 (FY32). Apart from parentage, Siemens Energy has technology leadership, a strong product portfolio, infrastructure, and leadership in several verticals. It could find opportunities across the entire value chain. READ MORE 7:10 AM Stock Market LIVE Updates: Corporate bond funds: Assess portfolio quality, expense ratio before entry Stock Market LIVE Updates: Corporate bond funds (CBFs) attracted ₹11,983 crore in net inflows in May, the highest among debt fund categories, according to data from the Association of Mutual Funds in India (Amfi). These funds invest in corporate bonds rated AAA and AA+, and hence carry low credit risk. 'The surge in investor interest in CBFs, leading to high inflows in May, is probably driven by relatively attractive yields compared to government securities, making high-rated bonds appealing. Ample system liquidity from the Reserve Bank of India (RBI) operations has also encouraged investment,' says Devang Shah, head – fixed income, Axis Mutual Fund. READ MORE 7:07 AM Stock Market LIVE Updates: Trump to decide on US action in Israel-Iran conflict within two weeks Stock Market LIVE Updates: President Donald Trump will decide within the next two weeks whether to strike Iran, the White House said Thursday, saying Trump still sees a 'substantial' chance that negotiations can achieve US and Israeli demands on Iran's nuclear programme. Trump's announcement, relayed by press secretary Karoline Leavitt, puts an extended timeline on the president's warnings to Iran to immediately shut down its enrichment operations and any other potential for producing nuclear weapons. 'Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future. I will make my decision whether or not to go within the next two weeks,' Leavitt quoted Trump as saying. READ MORE 7:07 AM Stock Market LIVE Updates: Kremlin warns US against Iran strike, cautions of major escalation Stock Market LIVE Updates: Washington would be making a serious mistake by launching an attack on Iran, Kremlin spokesperson Dmitry Peskov said, warning that direct US involvement in the ongoing Israel-Iran conflict would further destabilise the region, as reported by RT. Tensions have escalated since last week after Israel launched a large-scale bombing campaign against Iran, alleging that Tehran was on the verge of producing a nuclear bomb. Iran denied the allegations and responded with multiple drone and missile strikes. The exchange of hostilities between the two nations has continued, stoking fears of a wider regional war. Commenting on the possible US strike, Peskov said, "Moscow believes it is a wrong move. This is a step that is bound to lead to further escalation, a major escalation, and would only complicate the situation in the region," RT reported. 7:06 AM Stock Market LIVE Updates: RBI relief for project finance, only 1% provision in construction phase Stock Market LIVE Updates: In a huge relief to lenders, including commercial banks, the Reserve Bank of India (RBI) has mandated general provision of only 1 per cent of funded outstanding during the construction phase for all projects except for commercial real estate (CRE), as compared to 5 per cent proposed in the draft norms released in May last year. The final norms on project finance, released on Thursday, would come into effect from October 1, 2025, the RBI said. For CRE, the general provision requirement would be 1.25 per cent in construction phase while it would be 1 per cent for CRE-Residential Housing (RH). 7:01 AM Stock Market LIVE Updates: F&O: Here's a 'Bear Spread' for Nifty MidCap as it drops below 5, 20-DEMA Stock Market LIVE Updates: BEAR SPREAD Strategy on MIDCAP NIFTY Buy MIDCAP NIFTY (June 26 expiry) 12,700 PUT at ₹143 & simultaneously sell 12,600 PUT at ₹100 Lot Size:120 Cost of the strategy: ₹43 (₹ 5,160 per strategy) Maximum profit: ₹6,840 if the MIDCAP NIFTY closes at or below 12,600 on June 26 expiry Breakeven Point: ₹12,657 More Details Here 7:00 AM Stock Market LIVE Updates: China expectedly keeps key lending rates steady after May cut Stock Market LIVE Updates: China expectedly kept its benchmark lending rates unchanged Friday, following the sweeping monetary easing measures rolled out last month to boost growth. The People's Bank of China held the 1-year loan prime rate at 3 per cent and 5-year LPR at 3.5 per cent, according to a statement Friday, in line with Reuters poll estimates. Last month, Chinese authorities cut the lending rates for the first time since October by 10 basis points (bps), in their bid to cushion the impact from trade tensions with Washington.
