Shares nudge up, oil dips, with Middle East and central banks in focus
SYDNEY/LONDON :World shares nudged up on Monday, helped by oil walking back some of last week's increase, though the conflict between Israel and Iran remained a concern, adding further uncertainty to a week packed with central bank meetings.
The escalation in the Middle East came just as Group of Seven leaders were gathering in Canada, with U.S. President Donald Trump's tariffs already straining ties.
Iranian missiles struck Israel's Tel Aviv and the port city of Haifa on Monday, killing at least eight people and destroying homes, prompting Israel's defence minister to warn that Tehran residents would "pay the price and soon".
Yet there was no sign of panic among investors as currency markets stayed calm and Wall Street stock futures firmed after an early dip.
S&P 500 futures rose 0.6 per cent, and Brent was last off just over 1 per cent at $73.38 a barrel,, which analysts attributed to the fact the weekend strikes did not affect production and export facilities. [O/R]
But last week's 13 per cent surge means its inflationary impact, if sustained, could make the Federal Reserve more nervous about giving too many hints at its Wednesday meeting about interest rate cuts later in the year.
Markets are still wagering on two cuts by December, with a first move in September seen as most likely.
"The key is how much flexibility the Fed thinks it has. We've been pleasantly surprised we've not yet seen inflationary pass-through from the tariffs," said Ben Laidler, head of equity strategy at Bradesco BBI.
"The situation in the Middle East is the major issue of the day. The message from the market is that it isn't too afraid, but it does turn what was already going to be a busy week into a frenetic one, and that has a lot of people on the sidelines."
Data on U.S. retail sales on Tuesday may show a pullback in autos dragging the headline number down even as core sales edge higher. A market holiday on Thursday means weekly jobless claims figures are out on Wednesday.
For now, investors were waiting for this week's developments and MSCI's all-country world share index gained 0.2 per cent, to sit a touch below last week's record high.
Europe's STOXX 600 rose 0.4 per cent, led by a rebound in travel stocks after they suffered a large fall on Friday, and Gulf stocks also recovered. [.EU]
Earlier in the day, Chinese blue chips added 0.5 per cent, and Hong Kong gained 0.7 per cent as data showed Chinese retail sales rose 6.4 per cent in May to handily top forecasts, while industrial output was in line with expectations. [.SS]
EXPOSED TO OIL
In currency markets, the dollar gave back some of last Friday's gains against European currencies - the euro was up 0.2 per cent at $1.1571 - and held steady against the Japanese yen at 144.16.
The spike in oil prices is marginally negative for the yen and euro as both Japan and the EU are major importers of energy, while the United States is an exporter.
Currencies from oil exporters Norway and Canada both benefited, with the Norwegian crown hitting its highest since early 2023, before steadying.
"We should expect that economies with a positive energy trade balance should see their currencies benefiting from the shock to oil prices," noted analysts at Deutsche Bank.
"It's notable the dollar is in this category, highlighting how the U.S. has moved from a net energy-importer to a net exporter in recent years."
Central banks in Norway and Sweden meet this week, with the latter expected to trim rates.
The Swiss National Bank meets on Thursday and is considered certain to cut by at least a quarter point to take rates to zero, with some chance it may go negative given the strength of the Swiss franc.
The Bank of Japan holds a policy meeting on Tuesday and is widely expected to hold rates at 0.5 per cent, while leaving open the possibility of tightening later in the year.
There is also speculation it could consider slowing the rundown of its government bond holdings from next fiscal year.
Government bond yields nudged higher around the world. The U.S. 10-year Treasury yield was last up 3 basis points at 4.45 per cent Germany's 10-year Bund yield was up 2 bps at 2.56 per cent. [GVD/EUR]
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
36 minutes ago
- Straits Times
Trump signs proclamation to implement US-UK trade deal, Starmer calls it ‘sign of strength'
US President Donald Trump holds a signed trade agreement with Britain during a meeting with UK Prime Minister Keir Starmer, at the G-7 summit in Canada. PHOTO: REUTERS ALBERTA, Canada - US President Donald Trump and British Prime Minister Keir Starmer said on June 16 they had finalised a trade deal reached between the two allies last month. Mr Trump, standing alongside Mr Starmer at the Group of Seven summit in Canada, said the relationship with Britain was 'fantastic,' as he waved, and then briefly dropped, a document that he said he had just signed. 'We signed it and it's done,' he said, incorrectly calling it a trade agreement with the European Union, before making clear the deal was with Britain. Mr Starmer said the proclamation would implement agreements reached on auto tariffs and aerospace, without providing details. 'This is a very good day for both of our countries, a real sign of strength,' he said. Three sources familiar with the matter told Reuters earlier that the proclamation on terms of the deal would cover provisions on trade in steel, ethanol, autos and beef. The White House said US Commerce Secretary Howard Lutnick would determine a quota for UK steel and aluminum imports that could enter the United States without facing Mr Trump's 25 per cent tariff on steel. No further details were immediately available. Britain was the first country to agree on a deal for lower tariffs from Mr Trump, with the US reducing tariffs on imports of UK cars, aluminum and steel, and Britain agreeing to lower tariffs on US beef and ethanol. But implementation of the deal has been delayed while details were being hammered out. Britain called the deal a huge win for its aerospace and auto sectors, noting the UK was the only country to have secured such a deal with Washington. 'Bringing trade deals into force can take several months, yet we are delivering on the first set of agreements in a matter of weeks. And we won't stop there,' UK Trade Secretary Jonathan Reynolds said in a statement. Mr Reynolds said the two sides agreed to reciprocal access to 13,000 tonnes of beef, while making clear that US imports would need to meet tough UK food safety standards. He said both countries remain focused on securing 'significantly preferential outcomes' for the UK pharmaceutical sector, and work would continue to protect industry from any further tariffs imposed as part of Section 232 investigations under way by the US Commerce Department. Britain had avoided tariffs of up to 50 per cent on steel and aluminum that the US imposed on other countries earlier this month, but could have faced elevated tariffs starting July 9 unless the deal to implement the tariff reduction was reached. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
CNA
an hour ago
- CNA
Oil prices fall US$1 per barrel on reports Iran seeks truce with Israel
NEW YORK: Oil prices slipped US$1 per barrel on Monday (Jun 16) in volatile trading after reports that Iran is seeking an end to hostilities with Israel, raising the possibility of a truce and easing fears of a disruption to crude supplies from the region. Brent crude futures settled US$1, or 1.35 percent, lower to US$73.23 a barrel. US West Texas Intermediate crude futures fell US$1.21, or 1.66 percent, to US$71.77 per barrel. Iran has asked Qatar, Saudi Arabia and Oman to press US President Donald Trump to use his influence on Israel for an immediate ceasefire in return for Tehran's flexibility in talks about its nuclear program, two Iranian and three regional sources told Reuters. Earlier, the Wall Street Journal had reported Iran was seeking a truce. Traders pared bets that bombing by both sides could turn into a broader, regional war that would threaten energy infrastructure, Mizuho analyst Robert Yawger said. On Friday, oil prices surged more than 7 percent after Israel began bombing Iran over claims Tehran was close to securing an atomic bomb. Friday's surge put oil in "overbought territory" in terms of technical indicators, which is typically followed by a downward move, said Rory Johnston, an energy analyst and founder of the Commodity Context newsletter. "As I see it, the initial run up in prices on Thursday/Friday was fueled by a large inflow of speculative cash, which brought us back into overbought spec positioning levels," Johnston said. "When you're in that state, the market is especially vulnerable to sharp liquidations," Johnston added. Both Israel and Iran have traded airstrikes, including on energy infrastructure, but key oil export facilities have not yet been hit. "The Israelis have not touched Kharg Island, so that is the story right now," Mizuho's Yawger said, referring to the Iranian oil export hub. Yawger said any strikes on Kharg Island would likely send oil prices soaring to US$90 a barrel. "It all boils down to how the conflict escalates around energy flows," said Harry Tchilinguirian, group head of research at Onyx Capital Group. "So far, production capacity and export capacity have been spared and there hasn't been any effort on the part of Iran to impair flows through the Strait of Hormuz." Electronic interference with commercial ship navigation systems has surged in recent days around the Strait of Hormuz and the wider Gulf, which is having an impact on vessels sailing through the region, naval forces said on Monday. About a fifth of the world's total oil consumption, or some 18 to 19 million barrels per day of oil, condensate and fuel, passes through the strait. Iran, a member of the Organization of the Petroleum Exporting Countries, currently produces around 3.3 million bpd and exports more than 2 million bpd of oil and fuel. The spare capacity of OPEC+ oil producers to pump more to offset any disruption is roughly equivalent to Iran's output, according to analysts and OPEC watchers.
Straits Times
an hour ago
- Straits Times
Trump signs proclamation to implement US-UK trade deal, Starmer calls it 'sign of strength'
U.S. President Donald Trump holds a signed Trade Agreement with Britain during a meeting with British Prime Minister Keir Starmer, at the G7 summit, in Kananaskis, Alberta, Canada June 16, 2025. Stefan Rousseau/Pool via REUTERS KANANASKIS, Alberta - U.S. President Donald Trump and British Prime Minister Keir Starmer said on Monday they had finalized a trade deal reached between the two allies last month. Trump, standing alongside Starmer at the Group of Seven summit in Canada, said the relationship with Britain was "fantastic," as he waved, and then briefly dropped, a document that he said he had just signed. "We signed it and it's done," he said, incorrectly calling it a trade agreement with the European Union, before making clear the deal was with Britain. Starmer said the proclamation would implement agreements reached on auto tariffs and aerospace, without providing details. "This is a very good day for both of our countries, a real sign of strength," he said. Three sources familiar with the matter told Reuters earlier that the proclamation on terms of the deal would cover provisions on trade in steel, ethanol, autos and beef. The White House said U.S. Commerce Secretary Howard Lutnick would determine a quota for UK steel and aluminum imports that could enter the United States without facing Trump's 25% tariff on steel. No further details were immediately available. Britain was the first country to agree on a deal for lower tariffs from Trump, with the U.S. reducing tariffs on imports of UK cars, aluminum and steel, and Britain agreeing to lower tariffs on U.S. beef and ethanol. But implementation of the deal has been delayed while details were being hammered out. Britain called the deal a huge win for its aerospace and auto sectors, noting the UK was the only country to have secured such a deal with Washington. 'Bringing trade deals into force can take several months, yet we are delivering on the first set of agreements in a matter of weeks. And we won't stop there," UK Trade Secretary Jonathan Reynolds said in a statement. Reynolds said the two sides agreed to reciprocal access to 13,000 metric tons of beef, while making clear that U.S. imports would need to meet tough UK food safety standards. He said both countries remain focused on securing "significantly preferential outcomes" for the UK pharmaceutical sector, and work would continue to protect industry from any further tariffs imposed as part of Section 232 investigations under way by the U.S. Commerce Department. Britain had avoided tariffs of up to 50% on steel and aluminum that the U.S. imposed on other countries earlier this month, but could have faced elevated tariffs starting July 9 unless the deal to implement the tariff reduction was reached. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
