Oil prices drop sharply despite US strikes on Iran
NEW YORK CITY, New York: U.S. stocks went up and oil prices fell this week as investors hoped that Iran would not block the global supply of oil, even after the United States carried out airstrikes as part of the war between Israel and Iran.
The S&P 500 rose by one percent Monday, while the Dow Jones Industrial Average went up by 374 points (0.9 percent) and the Nasdaq gained 0.9 percent. These gains came after a week of market ups and downs due to fears of a wider war.
At first, oil prices jumped by six percent late on June 22, as markets reacted to the U.S. bombings in Iran. But by June 23, oil prices had dropped sharply. U.S. benchmark oil fell 7.2 percent to US$68.51 per barrel after briefly rising above $78. This brought oil prices back near where they were before the fighting started.
Prices fell further after Iran launched missiles at the Al Udeid Air Base in Qatar, used by the U.S. military. Iran said its attack matched the number of bombs dropped by the U.S., possibly suggesting it doesn't want to escalate the war further. Importantly, Iran's actions didn't stop the flow of oil, which is a significant concern for the world economy.
Iran is a big oil producer and controls the Strait of Hormuz, a narrow waterway through which 20 percent of the world's oil passes. Some experts worried Iran might block it, which would push oil prices much higher. But analysts said this is unlikely since Iran also depends on that route to export oil, especially to China.
Tom Kloza, an oil expert, said blocking the strait would be like burning everything down, something unlikely to happen. Another analyst, Neil Newman, believes the war might stay limited and that markets could return to normal soon. Still, some experts warned that Iran could act unpredictably.
Andy Lipow, a Houston oil analyst, said that if Iran shut down the strait, oil prices could jump to $120–130 a barrel, leading to higher prices for many goods. This would also make it harder for the Federal Reserve to cut interest rates, which it has been cautious about due to inflation and trade tensions.
However, Fed Governor Michelle Bowman said she could support cutting rates next month if inflation stays under control. As a result, Treasury yields dropped slightly, with the 10-year yield falling to 4.33 percent and the 2-year to 3.84 percent.
Tesla's stock surged 8.2 percent after launching a small fleet of self-driving taxis in Austin. But Hims & Hers Health dropped 34.6 percent after Novo Nordisk ended its partnership.
Overall, the S&P 500 closed at 6,025.17, the Dow at 42,581.78, and the Nasdaq at 19,630.97. In global markets, France's CAC 40 fell 0.7 percent, while Hong Kong's Hang Seng rose 0.7 percent.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Winnipeg Free Press
2 hours ago
- Winnipeg Free Press
Asian shares gain as investors shift focus to Federal Reserve, tariffs
BANGKOK (AP) — Asian shares have logged modest gains after U.S. stocks climbed to near their all-time high as investors considered comments by Federal Reserve Chair Jerome Powell to Congress. Oil prices gained more than 1% early Wednesday after falling about 6% on Tuesday on hopes that Israel's war with Iran will not hinder the global flow of crude. Lower oil prices could give the Federal Reserve leeway to cut interest rates to help the economy, and Powell said it is waiting for the right time to do so. The fragile ceasefire between Iran and Israel, announced by Trump a day earlier, appeared to be holding after initially faltering. U.S. benchmark crude gained 1.2% to $65.16 per barrel, while Brent crude, the international standard, climbed 1.1% to $66.95. Lower oil prices could give the Federal Reserve leeway to cut interest rates to help the economy, and Powell said it will continue to wait and see how the economy evolves before deciding whether to reduce its key interest rate, a stance directly at odds with President Donald Trump's calls for immediate cuts. 'For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,' Powell said in testimony Tuesday before the House Financial Services Committee. In Asian trading early Wednesday, Tokyo's Nikkei 225 picked up 0.3% to 38,917.08 and the Hang Seng in Hong Kong advanced 0.9% to 24,386.59. The Shanghai Composite index rose 0.5% to 3,437.10. In South Korea, the Kospi edged 0.2% higher to 3,110.19, while Australia's S&P/ASX 200 added 0.1% to 8,562.90. Taiwan's Taiex gained 1.1% and the Sensex in India was up 0.7%. In Bangkok, the SET slipped 0.4%. 'The world can now move on to face other difficult choices like tariffs and things like that. So I think the market is well on its way to rebound and could again reach new levels,' said Frances Lun, CEO of GEO Securities in Hong Kong. On Tuesday, the S&P 500 climbed 1.1% to 6,092.18, following up on big gains for stocks across Europe and Asia, after President Donald Trump said late Monday that Israel and Iran had agreed to a 'complete and total ceasefire.' The main measure of Wall Street's health is back within 0.8% of its record set in February after falling roughly 20% below during the spring. The Dow Jones Industrial Average jumped 1.2% to 43,089.02, and the Nasdaq composite rallied 1.4% to 19,912.53. The fear throughout the Israel-Iran conflict has been that it could squeeze the world's supply of oil, which would pump up prices for gasoline and hurt the global economy. Iran is a major producer of crude, and it could also try to block the Strait of Hormuz off its coast, through which 20% of the world's daily oil needs passes on ships. Now, oil prices have dropped so much in the last two days that they're below where they were before the fighting began nearly two weeks ago. With the global oil market well supplied and the OPEC+ alliance of producing countries steadily increasing production, oil prices could be headed even lower as long as the ceasefire holds and a lasting peace solution can be found. Monday Mornings The latest local business news and a lookahead to the coming week. 'Easing stress in energy markets is excellent news for everyone who doesn't want to see higher oil prices translating into accelerating inflation and tighter monetary policy. So the market mood is restored,' Ipek Ozkardeskaya, a senior analyst with Swissquote Bank, said in a commentary. The Fed has said repeatedly that it wants to wait and see how much higher tariffs imposed by Trump will hurt the economy and raise inflation before committing to its next move. So far, the economy seems to be holding up OK, though a report on confidence among U.S. consumers came in weaker than economists expected on Tuesday, and inflation has remained only a bit above the Fed's 2% target. In currency dealings, the U.S. dollar rose to 145.10 Japanese yen from 144.93 yen. The euro climbed to $1.1617 from $1.1610. ___ Video journalist Alice Feng in Hong Kong and AP Business Writer Stan Choe in New York contributed.
Canada News.Net
2 hours ago
- Canada News.Net
US business activity eases, price pressures build further
WASHINGTON, D.C.: U.S. business activity showed signs of softening in June while inflationary pressures continued to build, driven in part by President Donald Trump's sweeping tariffs and rising global uncertainty. The developments have complicated the Federal Reserve's interest rate plans and raised concerns about stagflation as the second half of the year begins. S&P Global's flash U.S. Composite PMI Output Index, which measures both manufacturing and services activity, dipped slightly to 52.8 in June from 53.0 in May. While still in expansion territory, the decline reflects weakening momentum. A separate measure of new orders slipped to 52.3 from 53.0, signaling softer demand. Prices, however, continued to rise. A key input cost index for manufacturers jumped to 70.0—its highest level since July 2022—mainly due to tariffs. S&P Global reported that nearly two-thirds of manufacturers facing higher costs attributed them to import duties, while over half said they passed those increases on to consumers. As a result, the index tracking prices charged by manufacturers surged to 64.5 from 59.7 in May. "With tariff-induced price hikes already set to squeeze household spending power, higher gasoline prices would intensify the strain on consumer pockets, risking a more pronounced slowdown in the economy," said James Knightley, chief international economist at ING. The strain is showing up in housing. A report from the National Association of Realtors showed that existing home sales rose 0.8 percent in May to 4.03 million units, which is still the slowest May pace since 2009. Sales were down 0.7 percent year-on-year, and the 1.3 percent rise in prices was the smallest since 2023. Inventory climbed to its highest level in nearly nine years, indicating softening demand as elevated mortgage rates continue to deter buyers. "Softer housing sector activity should be an early sign that underlying demand is weakening this year," said Veronica Clark, economist at Citigroup. The Fed, which last week held interest rates steady from 4.25 percent to 4.50 percent, is under increasing pressure. Vice Chair Michelle Bowman said rate cuts could resume as early as July, even as Fed Chair Jerome Powell warned of "meaningful" inflation ahead. Geopolitical tensions are adding to inflation fears. After U.S. airstrikes on Iran's nuclear facilities, Goldman Sachs warned that oil prices could spike to US$110 per barrel if shipping through the Strait of Hormuz were disrupted. Oil briefly hit a five-month high on Monday before retreating. Despite this backdrop, Wall Street rallied this week on hopes of Fed easing. The dollar slipped, and Treasury yields fell. While S&P's survey showed a modest pickup in employment—mainly driven by manufacturing—some economists remain cautious. Samuel Tombs of Pantheon Macroeconomics noted that unemployment claims are up and questioned the PMI's reliability as a predictor of actual job growth. "The employment index has been a poor guide to payroll growth lately," he said. "Other surveys all suggest that businesses are slowing employment growth." As tariff-related costs filter through and uncertainty in the Middle East persists, economists say the risks of slow growth combined with rising prices are growing, bringing the word "stagflation" back into focus.
Canada News.Net
6 hours ago
- Canada News.Net
Oil prices drop sharply despite US strikes on Iran
NEW YORK CITY, New York: U.S. stocks went up and oil prices fell this week as investors hoped that Iran would not block the global supply of oil, even after the United States carried out airstrikes as part of the war between Israel and Iran. The S&P 500 rose by one percent Monday, while the Dow Jones Industrial Average went up by 374 points (0.9 percent) and the Nasdaq gained 0.9 percent. These gains came after a week of market ups and downs due to fears of a wider war. At first, oil prices jumped by six percent late on June 22, as markets reacted to the U.S. bombings in Iran. But by June 23, oil prices had dropped sharply. U.S. benchmark oil fell 7.2 percent to US$68.51 per barrel after briefly rising above $78. This brought oil prices back near where they were before the fighting started. Prices fell further after Iran launched missiles at the Al Udeid Air Base in Qatar, used by the U.S. military. Iran said its attack matched the number of bombs dropped by the U.S., possibly suggesting it doesn't want to escalate the war further. Importantly, Iran's actions didn't stop the flow of oil, which is a significant concern for the world economy. Iran is a big oil producer and controls the Strait of Hormuz, a narrow waterway through which 20 percent of the world's oil passes. Some experts worried Iran might block it, which would push oil prices much higher. But analysts said this is unlikely since Iran also depends on that route to export oil, especially to China. Tom Kloza, an oil expert, said blocking the strait would be like burning everything down, something unlikely to happen. Another analyst, Neil Newman, believes the war might stay limited and that markets could return to normal soon. Still, some experts warned that Iran could act unpredictably. Andy Lipow, a Houston oil analyst, said that if Iran shut down the strait, oil prices could jump to $120–130 a barrel, leading to higher prices for many goods. This would also make it harder for the Federal Reserve to cut interest rates, which it has been cautious about due to inflation and trade tensions. However, Fed Governor Michelle Bowman said she could support cutting rates next month if inflation stays under control. As a result, Treasury yields dropped slightly, with the 10-year yield falling to 4.33 percent and the 2-year to 3.84 percent. Tesla's stock surged 8.2 percent after launching a small fleet of self-driving taxis in Austin. But Hims & Hers Health dropped 34.6 percent after Novo Nordisk ended its partnership. Overall, the S&P 500 closed at 6,025.17, the Dow at 42,581.78, and the Nasdaq at 19,630.97. In global markets, France's CAC 40 fell 0.7 percent, while Hong Kong's Hang Seng rose 0.7 percent.
