South Korea authorities to monitor financial markets, energy supplies
SEOUL, June 23 (Reuters) - South Korea's acting finance minister said on Monday that authorities would closely monitor financial markets and energy supplies and respond if needed amid escalating tension in the Middle East after the U.S. strike on Iran.
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Reuters
32 minutes ago
- Reuters
US attack on Iran adds to economic uncertainty
June 23(Reuters) - The U.S. bombing of Iran's nuclear sites injected fresh uncertainty into the outlook for inflation and economic activity at the start of a week chock full of new economic data and central banker commentary, including two days of Congressional testimony from Federal Reserve Chair Jerome Powell. The downside of the attacks may be the easiest to see: the potential for a spike in energy prices, a continuation of the hesitancy that has gripped households and businesses and could crimp spending, and the possibility of a response from Iran that materializes well outside the Gulf. With the U.S. economy already expected to slow under pressure from the Trump administration's high import tariffs, a rise in oil prices resulting from the conflict "could provide powerful downward pressure on households' ability to spend... and that could slow GDP even more," Morgan Stanley Chief Economic Strategist Ellen Zentner said on Sunday. There's also the more bullish case, should the attacks pave the way for eventual stability in the region. "Predicting geopolitical developments in the Middle East is a treacherous exercise," analysts at Yardeni Research wrote after the attacks. "However, the Israeli stock market suggests that we may be witnessing a radical transformation of the Middle East now that Iran has been de-nuked." Israel's Tel Aviv main index .TA125, opens new tabwas at an all-time high after the attacks. That said, the U.S. labor market is clearly losing momentum, even as inflation pressures look set to increase. Data due on Thursday for continued jobless claims will factor into the Labor Department's monthly jobs report for June. To date those reports have pointed to a softening but still-solid job market, with the unemployment rate at a relatively low 4.2%, but Fed policymakers keenly watching for signs of deterioration. Data to be published on Friday is expected to show the weakest U.S. consumer spending growth since January. And while it is also expected to show inflation running near the Fed's 2% goal last month, many Fed officials expect tariffs to feed into higher prices in coming months. A sharp rise in energy prices could fan the embers of inflation further. Powell will undoubtedly be pressed on that possibility and for other ramifications of Middle East developments during two days of Congressional testimony, beginning Tuesday at the House Financial Services Committee and continuing on Wednesday at the Senate Banking Committee. Fed officials last week left the policy rate in its current 4.25%-4.50% range, and while policymakers signaled they felt economic conditions would likely warrant a couple of interest-rate cuts later this year, Powell said that forecast comes with little conviction, given all the uncertainty about tariff policy and how the economy will respond. The weekend's U.S.-Iran developments raise new questions about how uncertainty will impact Fed decision-making, wrote Wells Fargo senior economist Sam Bullard. "The markets will be watching for clues as to how the Fed recalibrates the inflationary risks from higher energy prices and tariffs against the disinflationary pressures of slowing growth," he said.
Reuters
an hour ago
- Reuters
Equity investors seeking clarity should be careful what they wish for
LONDON, June 23 (Reuters) - Financial markets famously hate uncertainty, but getting answers to many of the open questions currently hanging over markets may end up offering investors little comfort. Several recent global developments, including President Donald Trump's April 2 tariff announcement and subsequent 90-day pause as well as the breakout of the Israel-Iran war, have sparked some of the highest levels of uncertainty in decades. If recent U.S. stock market performance is anything to go by, investors seem convinced that everything will work out just fine. Investors will likely get more clarity on several of these issues in the coming weeks, but they may find that this optimism is unwarranted. On July 9, the 90-day pause on Trump's Liberation Day 'reciprocal tariffs' will end, and unless the delay is extended or multiple trade deals are struck, U.S. import tariffs will essentially double from the 10% level today. So far, only the UK has managed to agree on a trade deal, and, even here, there is little clarity about the future of tariffs on UK steel exports. Negotiations with the European Union and Japan have stalled, and the EU has prepared a range of potential retaliatory measures. At the same time, the U.S. Commerce Department is preparing to present its findings on investigations into semiconductors, pharmaceuticals, copper, aircraft, jet engines and a host of other goods, opens new tab. It is widely expected that once these findings are presented, the U.S. government will act quickly to impose additional tariffs or import restrictions. Meanwhile, the Senate is expected to vote on the Trump administration's budget bill in July. The Congressional Budget Office has estimated, opens new tab that in its current form, this bill will add $3.3 trillion in extra debt over the coming decade. Investor confidence in the dollar and the safety of U.S. Treasuries has been shaken recently, partly due to the country's deteriorating fiscal outlook, so this deficit-expanding budget will only add fuel to the fire. And now, the war between Israel and Iran has been thrown into the mix, with the U.S. attacking Iranian nuclear sites on Sunday. Oil prices have increased by roughly 10% since the war broke out, though the price as of June 20 was still in line with the 2024 average. After the U.S. attacks, we could see Iranian retaliation against oil fields in the Middle East or the all-important Strait of Hormuz, which could drive oil prices much higher. With all these moving parts, it is easy to lose sight of what matters right now and what doesn't. While many actions, such as the extension of the 2017 tax cuts in the budget bill, will take years to unfold, the rise in tariff levels could have an immediate impact. The tariffs currently in place (e.g., base tariffs and tariffs on steel, aluminium and autos) could add 0.9 percentage points to U.S. inflation over the next 12 months, as importers are forced to pass tariff costs on to consumers. If there are no additional trade deals struck and tariffs revert to the higher levels announced on Liberation Day, another 0.7 percentage points could be added. And that doesn't even include potential tariffs on pharmaceuticals, semiconductors, and other goods. The inflation impact from the budget bill will likely be much smaller at roughly 0.1 percentage points over the next 12 months, and an oil price spike to $80 per barrel is apt to have roughly the same impact. Only if oil prices spike to about $100 and remain in that region for the next six months would we have to be seriously worried about an inflation shock from the war in the Middle East. Of course, if all these developments, including a 20% oil price spike, come to pass, U.S. inflation could rise from current levels by up to two percentage points in the next twelve months, dwarfing the likely impact on the UK and euro zone. Despite these concerning figures, U.S. equity investors seem nonplussed. U.S. stock markets, perhaps banking on another TACO moment, have rallied 15% above the level justified by macroeconomic fundamentals, based on my estimates. Over the last 10 years, a deviation of this size was followed by an average decline of 7% in the S&P 500 in the subsequent three months. The gap between performance and fundamentals is smaller in the euro zone and UK, suggesting any mean reversion would be less extreme there. Now, it's possible that everything – from the trade war to the real war – will end well. And stock markets have an uncanny ability to ignore adversity for a long time. However, if much of this uncertainty is resolved negatively, resulting in either higher U.S. inflation or lower growth, U.S. equities' surprising resilience is likely to be challenged. (The views expressed here are those of Joachim Klement, an investment strategist at Panmure Liberum, the UK's largest independent investment bank). Enjoying this column? Check out Reuters Open Interest (ROI), opens new tab, opens new tab, your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI, opens new tab, opens new tab can help you keep up. Follow ROI on LinkedIn, opens new tab, opens new tab and X., opens new tab
Daily Mail
an hour ago
- Daily Mail
I ditched the rat race in Australia and bought a home in Japan for just $6,000... I haven't looked back since
An Australian man sick of the unaffordable houses in the country has revealed how he managed to snag his dream property for just $6,000 in Japan. Matt Guy, 40, snapped up the two-storey home in the Myoko Kogen ski region, 267km northwest of Tokyo, in mid-2023. The home was built in the 1960s and previously belonged to an elderly couple who were eager for someone to take it off their hands. The property required several renovations, particularly to its bathroom, and Mr Guy has spent the last few years completing them. He's since dedicated his time to helping other Aussies drowning in the housing market to escape to more affordable areas. Mr Guy, an ex-tradie, first visited Japan in 2010 for six weeks - three of which he spent snowboarding. He returned in 2014 to enrol in a year-long language course and again in 2016 to work as an English teacher. Mr Guy made his love of Japan official in 2023 when he decided to permanently settle there. He and his Japanese wife live in their Myoko Kogen home and he works primarily as a content creator. Mr Guy's home is located near the ski slopes and has easy access to Tokyo via bullet train. 'My next-door neighbor is a sushi restaurant,' he told Business Insider. 'Two doors down, there's a soba restaurant. My local hospital is about 35 seconds walk away. The pharmacy is across the street from that. 'The post office is 15 seconds walk away.' As an extra bonus, the previous owners left several plants, pieces of furniture and kitchenware for him to keep. The house also boasts three bedrooms, several living spaces and a large garage. 'I came here without an intention to buy anything, but it just lined up that this house became available,' Mr Guy said. Japan has seen a boom in Australian tourism since the end of the Covid pandemic. Nearly a million Aussies visited Japan in 2024, marking a 50 per cent jump from 2023. Australian National University's Australia-Japan Research Centre director Dr Shiro Armstrong earlier this year explained Japan's low cost of living was likely a drawing card for many Aussies. 'You hear lots of Australian accents in Tokyo and many bars and restaurants are getting used to serving Australians,' he told the ABC. 'Eating out is very affordable compared to Australia because of the low wage costs - Japan has only recently escaped decades of mild deflation so prices have barely changed since 1990 - and the food, as everyone knows, is amazing. 'The tourist flows used to be dominated by Japanese visitors to Australia but with Japanese economic stagnation and the weak yen, we've seen a reversal since before Covid that's only becoming more pronounced.' As immigration into Australia under the Albanese government continues to soar, more Australians have been looking overseas to achieve their homeowner dreams. Jimmy Mitchell, 36, and wife Pauline, 35, previously told Daily Mail Australia they were willing to quit their 'stereotypical lifestyle' in Western Australia to travel around South East Asia with their two sons. 'In Australia we earned good money - this is the thing I couldn't get my head around. We had good jobs but we always felt like we weren't getting ahead,' Jimmy said. 'The more I worked and the harder I worked to earn the money so we could have the stuff, the less time I got to spend with my family.' In 2023, the couple were renting a four-bedroom house in Mandurah, an hour south of Perth, and working hard to save for a house deposit. The stress would sometimes reduce Jimmy to tears, and it was only getting 'progressively worse'. 'I'd come home and say to Pauline, 'I can't keep living like this anymore'. And that was a combination of the fact that we were both working in the business, the kids were at school and we had barely seen each other,' he said. The following year the family were able to travel through Malaysia, Vietnam and Thailand and shared plans to visit Japan and Hawaii this year. They attribute their ability to explore to the comparatively low cost of living outside of Australia.
