23-06-2025
- Business
- New Straits Times
Forex, stocks lower after US attacks on Iran boost uncertainty, oil supply risks
NEW YORK: Emerging market stocks and currencies were trading near a two-week low on Monday, after US attacks on Iran intensified geopolitical uncertainty and dampened risk appetite.
The US attacked nuclear sites in Iran over the weekend, drawing retaliatory threats from Iran.
Stock markets across the Middle East were mixed, with Israeli stocks down 0.7 per cent, still hovering around record highs. The index was set to snap a six-session winning streak.
Stocks in Turkey lost 0.6 per cent, while in Saudi Arabia , they were were one per cent higher.
International bonds in Israel were slightly higher to the dollar, while ones in Saudi Arabia were marginally lower.
Turkey's lira was at its lowest since March 19, set for its third session of declines. Israel's shekel strengthened 0.4 per cent.
Investors looked to dump risk assets amid the elevated uncertainty and favoured the US dollar, which was up 0.3 per cent, pressuring most emerging market currencies.
A report said Iran's parliament had approved closing the Strait of Hormuz, an important corridor for oil transportation, but the closure awaits approval from the top security body.
"Closing the Strait is the last option that Iran would resort to as it would certainly provoke a strong US military response, and also because its domestic economy relies on it," said Minna Kuusisto, chief analyst at Danske Bank.
Investors have been worried about the impact of a potential Hormuz closure on oil prices, which soared to a five-month high on Monday, and its impact on inflation.
Analysts at Sydbank estimated that a closure of the Strait of Hormuz would be the biggest shock to energy markets in more than 50 years and would significantly increase the headwinds in the financial markets.
In emerging Europe, most currencies were lower against the euro. The Hungarian forint and the Polish zloty were down 0.3 per cent each.
Regional bourses also slipped, in line with global stocks, with those in Poland and Romania losing 0.9 per cent and 0.7 per cent respectively.
South Africa's rand depreciated 0.3 per cent against the greenback, while stocks gained 0.5 per cent. Tech firm Naspers contributed with a 2.5 per cent gain after posting a 59.4 per cent jump in its full-year core headline earnings.
MSCI's index tracking global EM equities was down 0.7 per cent, as heavyweight Asian stocks lost ground, while the currencies index was down 0.4 per cent.
Elsewhere, Thailand's baht was down about 0.8 per cent. Prime Minister Paetongtarn Shinawatra said on Sunday that all coalition partners had pledged support for her government, days after facing calls to step down.
