Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
CHIA SẺ
Tensions in the Middle East stepped up a notch over the weekend. Israeli and American strikes on Iranian targets continue, prompting retaliatory counterattacks on surrounding countries. Saudi Arabia, Kuwait, Bahrain, Qatar and the UAE have now all reported attacks, including against airports, desalination plants, and of course, oil facilities. The sustained disruption to oil outflows has forced many oil exporters in the region to curb production. Iraq has been the hardest hit so far, with production falling 60% compared to pre-conflict levels. With the Strait of Hormuz still off limits, many oil terminals in the Persian Gulf are essentially cut off from the rest of the world, forcing affected countries to shut in large amounts of crude. The supply shock has sent oil prices through the roof, with the Brent Crude and WTI benchmarks both hitting $115 per barrel this morning, while local Murban Crude oil is now north of $120.
Markets are obviously not thrilled with the prospect of higher oil prices, as evidenced by Asian stock markets this morning. The Nikkei 225 fell over 7% at one point earlier today, while the Korean Kospi index once again hit circuit breakers after tumbling more than 8% during the morning trading session. Hong Kong’s Hang Seng index is somewhat more isolated, losing around 2.5% so far today. The situation in currencies is even more dire, with the Korean Won falling to its weakest level since 2009 and the Japanese Yen flirting with yearly lows against the US dollar. Sustained flows into the greenback have lifted the DXY to 99.5 as of this morning. As the day progresses, attentions will inevitably turn to European and US stock markets, futures for which are currently down around 2%.
Last Friday’s NFP report turned out to be shockingly bad for the US labour market, revealing a loss of 92 thousand jobs in February. Markets were understandably distracted by events in Iran at the time, but the focus may return to fundamentals this week, with several key data points on the economic calendar. Wednesday lays the groundwork for the latest reading on US inflation, courtesy of the Bureau of Labor Statistics, which is predicted to hit 2.5% YoY in February. The arguably more important reading arrives on Friday however, in the form of the PCE Price Index, which is held in higher regard by the Federal Reserve. Markets have largely written off the possibility of a rate cut during the next FOMC meeting or even the one after that, but a surprise fall in inflation, coupled with bad employment figures, could quickly shift expectations. Friday promises to be a busy day with regard to US economic data, as it will also see the publication of durable good orders, personal income growth, JOLTs job openings and Michigan Consumer Sentiment. Not much in terms of earnings this week, with the exception of Oracle (ORCL) on Tuesday and Adobe (ADBE) on Thursday, both after market close.
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