The US bombed Iran for a second day, and Iran struck US bases in the Gulf, causing oil prices to jump almost 10% in three days. Despite the danger, shipping is still transiting the Strait of Hormuz, albeit at a reduced volume.
Global Market Reaction
Stock investors in Asia initially shrugged off the news and bought the dip in chipmakers, but that optimism was short-lived. Japan’s Nikkei is still up 1.8% to break a three-day losing streak, while South Korea’s KOSPI climbed 4% before turning lower to hit a seven-week trough.
European bourses bucked the trend, with pan-region stock futures up 0.8%. Wall Street futures were flat. The chip enthusiasm is not entirely misplaced, as demand for SK Hynix’s US share offering was more than seven times the available shares.
Economic Implications
The bond market is flashing warning signs over inflation, and the rise in oil prices is much worse for Asia due to the regional dependence on energy imports. The risk of a renewed energy shock led markets to ramp up wagers that the Federal Reserve will have to raise interest rates this year.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
