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Oil Shoots Higher, Shares Skid Amid Mideast Conflict
Brent crude rose 23% in one day, the largest gain since 1988, as ongoing Middle East hostilities disrupt shipping and threaten global inflation and growth.
- On Monday, Brent crude oil soared 23 per cent to $US114 and US crude oil jumped 27 per cent to $US115.11, marking the biggest daily gains since at least 1988.
- With tankers avoiding the Strait of Hormuz, investors brace for prolonged higher energy costs while Iran named Mojtaba Khamenei to succeed Ali Khamenei, signalling hardliner control in Tehran.
- Share markets in Asia plunged as the inflationary shock kept the US dollar in demand, with South Korea's market falling 8.1 per cent after shedding more than 10 per cent last week.
- Rising inflation expectations reshaped policy bets as 10-year Treasury yields rose 6 basis points to 4.204 per cent and markets cut Bank of England easing odds to 40 per cent.
- Economists warn of wider risks as Bruce Kasman said 'The global economy remains dependent on the concentrated flow of Mideast oil and natural gas through the Strait of Hormuz' and that a near-term spike toward $US120 bbl is possible, with Brent potentially settling at $80 bbl.
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As the real tends to benefit from higher oil prices, the Brazilian currency can also find support in this movement
Global Market Today | Asian shares slide, oil surges on risk of lengthy Middle East conflict
Surging oil prices are fueling inflation fears and potentially higher interest rates globally, causing Asian share markets to slide. Investors are seeking liquidity in the U.S. dollar as geopolitical tensions in the Middle East threaten prolonged energy cost increases. Central banks face a difficult inflation conundrum.
As military tensions in the Middle East intensified, causing international oil prices to surge, Asian stock markets, including those in South Korea and Japan, plummeted. Analysts predict that Asian economies, heavily dependent on crude oil imports, will be hit hard by inflation concerns stemming from rising oil prices. As of 10:00 a.m. on the morning of the 9th, South Korea's KOSPI was trading at 5,175, down 7.3%. Investor sentiment sharply weak…
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