World markets rise, oil prices retreat despite Iran war escalation – National
Wall Street trailed global markets higher on Wednesday as US crude prices fell despite Iran’s spate of attacks on its Gulf neighbors.
Futures for the S&P 500 and the Dow Jones Industrial Average each rose 0.5 percent ahead of the Federal Reserve’s interest rate decision later in the day. Nasdaq futures rose 0.6 percent.
Benchmark US crude fell by US$1.24 to US$94.53 per barrel. Brent crude, the international standard, rose 75 cents to US$104.17 per barrel. That’s down from $106 on Monday.
As higher oil prices feed into further inflation, the Fed is widely expected to hold rates on Wednesday.
The Fed will also release a set of quarterly rates, which could lead the central bank to cut its forecast for one rate cut this year, to zero. While it may seem like a small adjustment, it would be a major course correction after 18 months of rate cuts again.
The Iran war has made it a very difficult time for policymakers to issue economic forecasts. Gasoline prices are rising and will increase inflation for at least the next month or two. The average price of a gallon of gasoline rose again overnight, reaching US$3.84. A gallon of gas last month, before the US and Israel attacked Iran, was less than US $3.
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Most economists expect that the Fed will predict that inflation will remain high at 3 percent even at the end of 2026, in addition to the December projection of 2.6 percent. An increase of that magnitude may be difficult to replicate with further interest rate cuts.
Iran launched a series of attacks on its Gulf neighbors and Israel on Wednesday following the killing of one of its top leaders in an airstrike. Iranian missiles disabled air defenses, killing two near Tel Aviv.
Global oil flows remain sluggish, ING Bank analysts Warren Patterson and Ewa Manthey wrote in a research note on Wednesday, as hopes grew that Iran could allow more ships through the Strait of Hormuz, a key waterway for transporting oil and gas around the world.
About a fifth of the world’s crude oil passes through the strait, which is largely closed as Iran blocks shipping connected to the US, Israel and its allies.
In equity trading, Macy’s jumped nearly seven percent after the department store reported stronger-than-expected fourth-quarter profit as comparable sales rose again. The department store said a revamp of its merchandise and improved customer service led to shoppers spending more.
In Europe, Germany’s DAX rose 0.9 percent, the CAC 40 in Paris rose 1.1 percent and Britain’s FTSE 100 rose 0.2 percent more.
During Asian trade, Tokyo’s Nikkei 225 gained 2.9 percent to 55,239.40 after the government reported that exports were higher than expected in February.
In South Korea, the Kospi jumped 5 percent to 5,925.03.
Low oil prices are a boon for major oil importers such as Japan and South Korea.
Hong Kong’s Hang Seng recovered early losses, rising 0.6 percent to 26,025.42, while the Shanghai Composite index also rallied, gaining 0.3 percent to 4,062.98.
Australia’s S&P/ASX 200 rose 0.3 percent to 8,640.60.
Taiwan’s Taiex added 1.5 percent and India’s Sensex advanced 1 percent.
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