ASX set to rise as Wall Street gains in face of conflict; Oil prices tumble
US stocks are climbing, and the price of oil is tumbling Monday on growing hopes that Iran will not disrupt the global flow of crude, something that would hurt economies worldwide but also its own, following the United States' bunker-busting entry into its war with Israel.
The S&P 500 was 0.7 per cent higher in afternoon trading, coming off a week where stock prices had jumped up and down on worries about the conflict potentially escalating. The Dow Jones was up 269 points, or 0.6 per cent, as of 2 p.m. Eastern time, and the Nasdaq composite was 0.8 per cent higher.
The Australian sharemarket is set to advance, with futures at 5am AEST pointing to a gain of 52 points or 0.6 per cent, at the open. The ASX lost 0.4 per cent on Monday. The Australian dollar is 0.1 per cent higher at 64.56 US cents at 5.10am.
The price of oil did jump 4 per cent shortly after trading began Sunday night, a signal of rising worries as investors got their first chance to react to the US bombings. But it quickly erased all those gains and swung to a sharp loss as the focus shifted from what the US military did to how Iran would react.
By Monday afternoon, the price of a barrel of benchmark US oil was down 6.1 per cent at $US69.34. Brent crude, the international standard, dropped 5.3 per cent to $US71.50 per barrel. That brought oil prices nearly back to where they were before the fighting began over a week ago, when a barrel of US crude was just above $US68.
The losses accelerated sharply Monday after Iran announced a missile attack on Al Udeid Air Base in Qatar, which the US military uses. Iran said it matched the number of bombs dropped by the United States on Iranian nuclear sites this past weekend, which could be a potential signal of a desire to deescalate the conflict.
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Perhaps most importantly for financial markets, that retaliation did not seem to target the flow of oil. The fear throughout the Israel-Iran war has been that it could squeeze the world's supply of oil, which would pump up prices for it, petrol and other products refined from crude.
Iran is a major producer of crude, and it could also try to block the Strait of Hormuz off its coast, through which 20 per cent of the world's daily oil needs passes on ships.
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The Advertiser
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Inflation warning as conflict in Middle East escalates
Iran's response to US military strikes could lead to a surge in the price of fuel and higher inflation in Australia, economists say. Motorists have already seen a slight rise in the cost of fuel after the US launched strikes against three Iranian nuclear facilities. While Australian consumers have been told not to panic about the Middle Eastern unrest, escalating conflict in the region could lead to further price hikes, AMP chief economist Shane Oliver says. "The real risk would be if intervention by the US sets off retaliation by Iran that disrupts oil supplies," he told AAP. "If Iran do successfully block the Strait of Hormuz, then you'll end up with a bigger spike in oil prices and petrol and that will have a severe economic impact." Mr Oliver said petrol would rise by 25 cents per litre in the likely event oil prices skyrocketed to more than $100 a barrel. He said an increase in petrol costs could push up inflation, which would flow on to other parts of the economy. "If the oil price went to $100 to $150 a barrel and it's a much bigger boost to inflation, the Reserve Bank of Australia would be inclined to wait before cutting interest rates again," he said. "The price of airfares could go up, as well as plastic prices, which affects a lot of household goods." Australian Travel Industry Association chief executive Dean Long said airfares were not likely to increase immediately following the escalation in conflict in the Middle East. However, he said travellers heading through the Middle East on the way to Europe would likely face longer journeys. "The increase in congestion is causing delays," he told AAP. "With the narrowest flight path in recent memory - with Russia, Ukraine, Iran and Israel closed - the airspace is very narrow to get to Europe. "Beforehand, there were multiple ways to catch up delays and stay on times, but in reality, there is a very narrow window to catch up delays, and there is less room for error by the airlines." Mr Long said there had not been any major disruptions for Australian travellers so far and urged passengers not to cancel their flights. But on Tuesday, after Iran retaliated by carrying out a missile attack on the Al-Udeid US air base in Qatar, some flights from the capital Doha to Australia were delayed after the airspace in and out of Hamad International Airport was closed. Prime Minister Anthony Albanese has backed America's intervention in the conflict between Iran and Israel on the basis that Iran should not have access to nuclear weapons. Iran's response to US military strikes could lead to a surge in the price of fuel and higher inflation in Australia, economists say. Motorists have already seen a slight rise in the cost of fuel after the US launched strikes against three Iranian nuclear facilities. While Australian consumers have been told not to panic about the Middle Eastern unrest, escalating conflict in the region could lead to further price hikes, AMP chief economist Shane Oliver says. "The real risk would be if intervention by the US sets off retaliation by Iran that disrupts oil supplies," he told AAP. "If Iran do successfully block the Strait of Hormuz, then you'll end up with a bigger spike in oil prices and petrol and that will have a severe economic impact." Mr Oliver said petrol would rise by 25 cents per litre in the likely event oil prices skyrocketed to more than $100 a barrel. He said an increase in petrol costs could push up inflation, which would flow on to other parts of the economy. "If the oil price went to $100 to $150 a barrel and it's a much bigger boost to inflation, the Reserve Bank of Australia would be inclined to wait before cutting interest rates again," he said. "The price of airfares could go up, as well as plastic prices, which affects a lot of household goods." Australian Travel Industry Association chief executive Dean Long said airfares were not likely to increase immediately following the escalation in conflict in the Middle East. However, he said travellers heading through the Middle East on the way to Europe would likely face longer journeys. "The increase in congestion is causing delays," he told AAP. "With the narrowest flight path in recent memory - with Russia, Ukraine, Iran and Israel closed - the airspace is very narrow to get to Europe. "Beforehand, there were multiple ways to catch up delays and stay on times, but in reality, there is a very narrow window to catch up delays, and there is less room for error by the airlines." Mr Long said there had not been any major disruptions for Australian travellers so far and urged passengers not to cancel their flights. But on Tuesday, after Iran retaliated by carrying out a missile attack on the Al-Udeid US air base in Qatar, some flights from the capital Doha to Australia were delayed after the airspace in and out of Hamad International Airport was closed. Prime Minister Anthony Albanese has backed America's intervention in the conflict between Iran and Israel on the basis that Iran should not have access to nuclear weapons. Iran's response to US military strikes could lead to a surge in the price of fuel and higher inflation in Australia, economists say. Motorists have already seen a slight rise in the cost of fuel after the US launched strikes against three Iranian nuclear facilities. While Australian consumers have been told not to panic about the Middle Eastern unrest, escalating conflict in the region could lead to further price hikes, AMP chief economist Shane Oliver says. "The real risk would be if intervention by the US sets off retaliation by Iran that disrupts oil supplies," he told AAP. "If Iran do successfully block the Strait of Hormuz, then you'll end up with a bigger spike in oil prices and petrol and that will have a severe economic impact." Mr Oliver said petrol would rise by 25 cents per litre in the likely event oil prices skyrocketed to more than $100 a barrel. He said an increase in petrol costs could push up inflation, which would flow on to other parts of the economy. "If the oil price went to $100 to $150 a barrel and it's a much bigger boost to inflation, the Reserve Bank of Australia would be inclined to wait before cutting interest rates again," he said. "The price of airfares could go up, as well as plastic prices, which affects a lot of household goods." Australian Travel Industry Association chief executive Dean Long said airfares were not likely to increase immediately following the escalation in conflict in the Middle East. However, he said travellers heading through the Middle East on the way to Europe would likely face longer journeys. "The increase in congestion is causing delays," he told AAP. "With the narrowest flight path in recent memory - with Russia, Ukraine, Iran and Israel closed - the airspace is very narrow to get to Europe. "Beforehand, there were multiple ways to catch up delays and stay on times, but in reality, there is a very narrow window to catch up delays, and there is less room for error by the airlines." Mr Long said there had not been any major disruptions for Australian travellers so far and urged passengers not to cancel their flights. But on Tuesday, after Iran retaliated by carrying out a missile attack on the Al-Udeid US air base in Qatar, some flights from the capital Doha to Australia were delayed after the airspace in and out of Hamad International Airport was closed. Prime Minister Anthony Albanese has backed America's intervention in the conflict between Iran and Israel on the basis that Iran should not have access to nuclear weapons. Iran's response to US military strikes could lead to a surge in the price of fuel and higher inflation in Australia, economists say. Motorists have already seen a slight rise in the cost of fuel after the US launched strikes against three Iranian nuclear facilities. While Australian consumers have been told not to panic about the Middle Eastern unrest, escalating conflict in the region could lead to further price hikes, AMP chief economist Shane Oliver says. "The real risk would be if intervention by the US sets off retaliation by Iran that disrupts oil supplies," he told AAP. "If Iran do successfully block the Strait of Hormuz, then you'll end up with a bigger spike in oil prices and petrol and that will have a severe economic impact." Mr Oliver said petrol would rise by 25 cents per litre in the likely event oil prices skyrocketed to more than $100 a barrel. He said an increase in petrol costs could push up inflation, which would flow on to other parts of the economy. "If the oil price went to $100 to $150 a barrel and it's a much bigger boost to inflation, the Reserve Bank of Australia would be inclined to wait before cutting interest rates again," he said. "The price of airfares could go up, as well as plastic prices, which affects a lot of household goods." Australian Travel Industry Association chief executive Dean Long said airfares were not likely to increase immediately following the escalation in conflict in the Middle East. However, he said travellers heading through the Middle East on the way to Europe would likely face longer journeys. "The increase in congestion is causing delays," he told AAP. "With the narrowest flight path in recent memory - with Russia, Ukraine, Iran and Israel closed - the airspace is very narrow to get to Europe. "Beforehand, there were multiple ways to catch up delays and stay on times, but in reality, there is a very narrow window to catch up delays, and there is less room for error by the airlines." Mr Long said there had not been any major disruptions for Australian travellers so far and urged passengers not to cancel their flights. But on Tuesday, after Iran retaliated by carrying out a missile attack on the Al-Udeid US air base in Qatar, some flights from the capital Doha to Australia were delayed after the airspace in and out of Hamad International Airport was closed. Prime Minister Anthony Albanese has backed America's intervention in the conflict between Iran and Israel on the basis that Iran should not have access to nuclear weapons.
The Age
an hour ago
- The Age
ASX set to rise as Wall Street rallies in face of conflict; Oil prices tumble; Tesla surges
US stocks rallied, and the price of oil tumbled on hopes that Iran will not disrupt the global flow of crude, something that would hurt economies worldwide but also its own, following the United States' bunker-busting entry into its war with Israel. The S&P 500 climbed 1 per cent, coming off a week where stock prices had jumped up and down on worries about the conflict potentially escalating. The Dow Jones added 374 points, or 0.9 per cent, and the Nasdaq composite gained 0.9 per cent. The Australian sharemarket is set to advance, with futures at 6.09am AEST pointing to a gain of 62 points or 0.7 per cent, at the open. The ASX lost 0.4 per cent on Monday. The Australian dollar is 0.1 per cent higher at 64.56 US cents at 5.10am. The price of oil initially jumped 6 per cent after trading began Sunday night, a signal of rising worries as investors got their first chance to react to the US bombings. But it quickly erased all those gains and swung to a sharp loss as the focus shifted from what the US military did to how Iran would react. By late Monday, the price of a barrel of benchmark US oil had dropped 7.2 per cent to settle at $US68.51 after briefly topping $US78. That brought it nearly all the way back to where it was before the fighting began over a week ago, when it was sitting just above $US68. Loading The losses accelerated sharply after Iran announced a missile attack on Al Udeid Air Base in Qatar, which the US military uses. Iran said it matched the number of bombs dropped by the United States on Iranian nuclear sites this past weekend, which could be a signal of a desire to deescalate the conflict. Perhaps most importantly for financial markets, Iran's retaliation did not seem to target the flow of oil. The fear throughout the Israel-Iran war has been that it could squeeze the world's supply of oil, which would pump up prices for it, gasoline and other products refined from crude. Iran is a major producer of crude, and it could also try to block the Strait of Hormuz off its coast, through which 20 per cent of the world's daily oil needs passes on ships.
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