Asian shares slip, oil rises as investors weigh Iran scenarios
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SYDNEY, - Shares slipped in Asia on Monday and oil prices briefly hit five-month highs as investors anxiously waited to see if Iran would retaliate against U.S. attacks on its nuclear sites, with resulting risks to global activity and inflation.Early moves were contained, with the dollar getting only a minor safe-haven bid and no sign of panic selling across markets. Oil prices were up around 2.8%, but off their initial peaks.Optimists were hoping Iran might back down now its nuclear ambitions had been curtailed, or even that regime change might bring a less hostile government to power there.Analysts at JPMorgan, however, cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76% and averaging a 30% rise over time.Key will be access through the Strait of Hormuz, which is only about 33 km (21 miles) wide at its narrowest point and sees around a quarter of global oil trade and 20% of liquefied natural gas supplies. "Selective disruptions that scare off oil tankers make more sense than closing the Strait of Hormuz given Iran's oil exports would be shut down too," said Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia."In a scenario where Iran selectively disrupts shipping through the Strait of Hormuz, we see Brent oil reaching at least $100/bbl."For now, Brent was up a relatively restrained 2.7% at $79.12 a barrel, while U.S. crude rose 2.8% to $75.98.Elsewhere in commodity markets, gold edged down 0.1% to $3,363 an ounce.Share markets were proving resilient so far, with S&P 500 futures off a moderate 0.5% and Nasdaq futures down 0.6%.MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5, and Japan's Nikkei eased 0.9%.EUROSTOXX 50 futures lost 0.7%, while FTSE futures fell 0.5% and DAX futures slipped 0.7%. Europe and Japan are heavily reliant on imported oil and LNG, whereas the United States is a net exporter.The dollar edged up 0.3% on the Japanese yen to 146.48 yen , while the euro dipped 0.3% to $1.1481. The dollar index firmed 0.17% to 99.078.There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising 2 basis points to 4.397%.Futures for Federal Reserve interest rates were a tick lower, likely reflecting concerns a sustained rise in oil prices would add to inflationary pressures at a time when tariffs were just being felt in U.S. prices.Markets are still pricing only a slim chance the Fed will cut at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing.Most other Fed members, including Chair Jerome Powell, have been more cautious on policy leading markets to wager a cut is far more likely in September.At least 15 Fed officials are speaking this week, and Powell faces two days of questions from lawmakers, which is certain to cover the potential impact of President Donald Trump's tariffs and the attack on Iran.The Middle East will be high on the agenda at a NATO leaders meeting at the Hague this week, where most members have agreed to commit to a sharp rise in defence spending. Among the economic data due are figures on U.S. core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe.
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Live Events Valuations at Tipping Point Earnings Under Pressure Where the Smart Money Is Moving Bottom Line: What Should Investors Do? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Foreign institutional investors (FIIs) have gone on a selling spree, offloading nearly Rs 1 lakh crore worth of Indian equities in just six months across six key sectors of consumer durables FMCG , and IT . The sharp pullback, concentrated in segments once considered defensives or structural bets, underscores rising concerns around valuations, global macro uncertainty, and a shifting earnings biggest casualty is the IT sector, which alone has seen Rs 33,479 crore in net FII outflows, or a third of total selling. 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Positions in L&T, Thermax, and Godrej Properties are being exited, replaced with TVS Motor, Home First Finance, and Manappuram Finance. Additional exposure is also being added to PolicyBazaar and Bharti Airtel, signaling a shift to consumption- and credit-focused domestic flows remain robust, the intensity and concentration of FII selling, especially in IT, FMCG, and auto, should not be ignored. With nearly ₹1 lakh crore of outflows in six months, the foreign money is clearly betting on earnings downgrades, valuation fatigue, and a global demand slowdown.'We seek out quality, high-integrity businesses at reasonable valuations… Our value-conscious approach often leads us to sectors that may be out of favour but possess strong fundamentals,' Mehta investors navigating this turbulent landscape, the data suggests a clear bifurcation: domestic-oriented sectors like telecom and financials are attracting foreign capital, while export-dependent sectors face sustained selling pressure. The challenge lies in timing entry points as valuations remain elevated despite the sectoral rotation.(Data: Ritesh Presswala): Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
