Asian stock markets have rebounded after days of heavy losses driven by the war in the Middle East, but oil and gas prices have continued to climb amid significant disruption to supplies. South Korea’s KOSPI index, which posted its biggest ever fall of 12% on Tuesday, rose by almost 10% on Thursday, while Japan’s Nikkei climbed by 1.9%. MSCI’s Asia-Pacific index excluding Japan jumped by 2.7%.
Oil prices rose further after Iran’s Tasnim news agency reported that a US oil tanker in the northern Persian Gulf had been hit by a missile launched by Iranian forces. Brent crude lifted by 3.3% to $84 a barrel. Gas prices also pushed higher, with UK gas up almost 1%, while European natural gas futures climbed 2%. Qatar, the Gulf’s biggest liquefied natural gas producer, suspended activity at its facilities on Monday and declared force majeure on gas exports on Wednesday, freeing it from contractual obligations to customers. Reuters quoted sources as saying a return to normal production volumes could take at least a month.
In the Middle East, the Abu Dhabi stock market fell by 2.6% while the Dubai exchange was down 2.2%, with both exchanges announcing they would temporarily set a 5% lower price limit on securities. In London, the FTSE 100 index slipped by 0.3% in early trading but later rose 60 points, or about 0.5%. Wizz Air, which has cancelled flights to and from Israel, Dubai, Abu Dhabi, and Amman until 15 March, warned of a €50m hit to annual profits, also reflecting the impact of higher jet fuel costs, with its London-listed shares falling as much as 6%.
China’s government has told the country’s biggest oil refiners to halt exports of diesel and gasoline as it faces disruption to crude supplies, according to Bloomberg. It reported that officials from the National Development and Reform Commission, the top economic planning body, met refinery executives and called for a temporary suspension of refined product shipments to begin immediately. In South Korea, a ruling party lawmaker Kim Young-bae warned that the US-Israeli war with Iran, now in its sixth day, could disrupt supplies of important semiconductor manufacturing materials, noting that the chip industry, which supplies two-thirds of global memory chips, is concerned a prolonged conflict will lead to higher energy costs and prices.
Stephen Innes, managing partner at SPI Asset Management, stated: “The geopolitical backdrop remains as combustible as ever. President Donald Trump continues to project confidence in the military campaign against Iran even as the timeline for operations remains murky. Missiles are still flying across the region, and bombs are still falling. Yet the strategic calculus on trading desks has begun to shift subtly but importantly.” He pointed to intelligence suggesting Iran’s conventional military capacity is deteriorating quickly after naval losses and airstrikes, while also citing “solid” US economic data, including a strong ADP jobs report and a jump in service sector activity.
Source: www.theguardian.com