Stocks struggle, oil up for 3rd week as Trump weighs US action on Iran
SYDNEY, June 20 (Reuters) – Share markets in Asia struggled for direction on Friday as fears of a potential US attack on Iran hung over markets, while oil prices were poised to rise for a third straight week on the escalating Israel-Iran conflict.
Overnight, Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel as a week-old air war intensified with no sign yet of an exit strategy from either side.
The White House said President Donald Trump will decide in the next two weeks whether the US will get involved in the Israel-Iran war. The US President is facing uproar from some of his MAGA base over a possible strike on Iran.
Brent fell 2% on Friday to $77.22 per barrel, but is still headed for a strong weekly gain of 4%, following a 12% surge the previous week.
'The 'two-week deadline' is a tactic Trump has used in other key decisions, including those involving Russia and Ukraine, and tariffs,' said Tony Sycamore, analyst at IG.
'Often, these deadlines expire without concrete action, (similar to TACO), and there is certainly a risk of this happening again, given the complexities of the situation.'
Still, a cautious mood prevailed in markets with Nasdaq futures and S&P 500 futures both 0.3% lower in Asia. US markets were closed for the Juneteenth holiday, offering little direction for Asia.
The MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1% but was set for a weekly drop of 1%. Japan's Nikkei slipped 0.2%.
China's blue chips rose 0.3%, while Hong Kong's Hang Seng gained 0.5%, after the central bank held the benchmark lending rates steady as widely expected.
In the currency markets, the dollar was on the back foot again, slipping 0.2% to 145.17 yen after data showed Japan's core inflation hit a two-year high in May, which kept pressure on the Bank of Japan to resume interest rate hikes.
Investors, however, see little prospects of a rate hike from the BOJ until December this year, which is a little over 50% priced in.
The US bond market, which was also closed on Thursday, started trading in Asian hours on a subdued note. Ten-year Treasury bond yield was flat at 4.389%, while two-year yields slipped 2 basis points to 3.925%.
Overnight, the Swiss National Bank cut rates to zero and did not rule out going negative, while the Bank of England held policy steady but saw the need for further easing and Norway's central bank surprised everyone and cut rates for the first time since 2020.
Gold prices eased 0.2% to $3,363 an ounce, but were set for a weekly loss of 2%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
an hour ago
- IOL News
Will SA bear the cost of Eskom's R257bn air quality compliance?
Cooling towers at an Eskom coal-based power station in Duhva. Image: Mike Hutchings/Reuters SOUTH Africa's electricity crisis is about to get worse, not just because of load shedding, but because of the staggering cost of cleaning up Eskom's toxic air pollution. In a tense engagement with the National Council of Provinces (NCOP) Select Committee on Agriculture, Land Reform and Mineral Resources, Eskom executives dropped a bombshell: full compliance with stricter air quality laws would cost R257 billion in capital expenditure and R6.3bn per year in operational costs — potentially hiking electricity tariffs by 10%. Even more alarming? Without compliance, 22 gigawatts of Eskom's coal fleet — nearly half its capacity — could be forcibly shut down after 2030 due to sulphur dioxide violations. The revelations came as Eskom's chief executive, Dan Marokane, and Deputy Minister of Electricity and Energy, Samantha Graham-Mare, faced tough questions from MPs over the utility's financial constraints, its slow transition to cleaner energy, and the devastating health impacts of coal pollution on communities. Eskom has already spent R3bn on emission reduction projects, with another R15.6bn allocated over the next five years. But this is a drop in the ocean compared to what is needed. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading Marokane admitted that while Eskom currently met SO² and nitrogen oxide limits, post-2030 regulations present an existential threat. The utility's proposed 'compromise' solution — focusing on SO² reductions at Kusile and Medupi, along with particulate matter upgrades at six other stations — would still require R77bn in capital and R2.1bn per year in operational costs. But even this plan is in jeopardy. Only R15.6bn has been budgeted for emissions projects over the next five years — far short of what's needed. Perhaps the most damning admission came from Deidre Herbst, Eskom's Senior Manager for Environment, who revealed that retrofitting the aging coal fleet for full compliance could take up to 14 years and more than R257bn — only for many of these plants to be decommissioned shortly afterward. 'Given the time frames, refitting most plants would be imprudent, constituting fruitless and wasteful expenditure,' Herbst said. Several power stations — Matla, Duvha, and Kriel — will shut down before flue-gas desulfurisation (FGD) plants can even be installed. Others, such as Lethabo, Tutuka, Matimba, and Kendal, will close shortly after FGD completion. 'Majuba and Matimba are in sparsely populated areas, limiting the health impact and cost benefit,' Herbst said — an utterance that drew sharp criticism from MPs who accused Eskom of downplaying the health risks to rural communities. MPs did not hold back in their criticism. DA MP Nico Pienaar demanded answers on why R40bn was being spent on diesel generation — money that could instead fund FGD plants. 'What happens if the new FGD plant isn't built and diesel turbines aren't closed, as per the World Bank agreement?' he asked. The DA's Sune Boshoff was even more scathing: 'Gauteng looks terrible when the wind blows. Is Eskom not wasting money on upgrading structures that won't exist much longer?' She slammed the projected 10% tariff hike to fund compliance, asking why alternative technologies and international funding were not being aggressively pursued. The EFF's Moses Kennedy pressed Eskom on whether independent health impact assessments had been conducted near Kendal, Matla, and Duvha stations, where residents suffer from chronic respiratory illnesses. Herbst admitted that while health benefits from cleaner stoves had been studied, power station health assessments were still lacking. Eskom's much-touted Just Energy Transition (JET) also came under fire. The state-owned utility's air quality offset programme — meant to provide cleaner energy alternatives to 96 000 households in Mpumalanga — has reached only 5 500 homes so far. Herbst claimed the rollout would accelerate, but MPs remained sceptical. Meanwhile, Northern Cape representatives Henri van den Berg (FF+) and Patricia Mabilo (ANC) pushed for green hydrogen and ammonia projects, arguing that they could create jobs. Deputy Minister Graham-Mare revealed that the EU had pledged €7bn for energy transition projects, including aviation sector decarbonisation. But with coal-dependent regions such as Mpumalanga facing massive job losses, MPs questioned whether the transition was truly 'just'. Marokane hinted at a controversial solution: nuclear energy. 'Most countries are building nuclear,' he said, suggesting that South Africa's Integrated Resource Plan (IRP) should reconsider its stance. 'Nuclear stimulates economies and industrialisation.' Yet, with Eskom's finances in shambles and R50bn earmarked for new technologies — including a Medupi FGD plant — the feasibility of nuclear expansion remained doubtful. Eskom's dilemma is clear: Spend R257 billion to comply with air quality laws, raising tariffs by 10%. Risk 22 GW of shutdowns if they don't comply, plunging SA into darkness. Face public outrage over health impacts and job losses in coal regions. As Deputy Minister Graham-Mare admitted, 'This is about balancing interests with limited resources.' But for millions of South Africans choking on coal pollution and struggling with soaring electricity costs, that balance feels dangerously skewed. The question remains: Will Eskom clean up its act—or will South Africans pay the price for its failure? Get the real story on the go: Follow the Sunday Independent on WhatsApp.
IOL News
9 hours ago
- IOL News
What the US Fed's interest rate decision means for South Africa's property sector
Further rate cuts this year would be beneficial for property developers and investors, as well as for stimulating domestic consumption, which could, in turn, support local economic growth. Image: Tracey Adams/Independent Media The United States Federal Reserve's decision to maintain interest rates may influence the South African Reserve Bank's (SARB) Monetary Policy Committee when it meets to announce its decision on the local repo rate at the end of next month. On Wednesday night, the US Federal Reserve kept interest rates steady but signalled possible cuts later this year. Fed chairperson, Jerome Powell, warned that rising tariffs could push inflation higher and delayed any easing - much to the dismay of President Trump, said Bianca Botes, Director at Citadel Global. She said Asian markets retreated as investors grew cautious, with stocks and currencies weakening amid uncertainty over US involvement in the Israel-Iran conflict. 'Oil prices slipped after President Trump's unclear stance on the Middle East conflict. US equity futures have edged lower, while trading in Treasuries has paused for the US Juneteenth holiday. The rand is on the back foot given the current cautious setting. It starts the day at R18.04/$, R20.68/€ and R24.19/£,' Botes said on Thursday morning. Early indicators from the SARB and various economists suggest that a rate cut may be considered at the upcoming meeting, aligning with the global trend toward a monetary easing cycle, says Dr Farai Nyika, an Academic Programme Leader at the School of Public Administration of the Management College of Southern Africa (Mancosa). He said that notably, other major economies such as Switzerland and Norway have recently cut interest rates, while the United Kingdom has opted to maintain its current rates. 'The European Central Bank also reduced its rates on June 5, 2025, reinforcing the broader trend of declining interest rates,' Nyika said. The academic said further rate cuts would be beneficial for property developers and investors, as well as for stimulating domestic consumption, which could, in turn, support local economic growth. However, he said this optimistic outlook remains uncertain. With the recent geopolitical tensions, including the outbreak of hostilities between Israel and Iran, he said this may exert inflationary pressures through increased imported fuel costs. 'This phenomenon of 'imported inflation' could compel the SARB to delay any anticipated rate cuts in July. Nonetheless, the local property market is in a stronger position than it was one or two years ago, largely due to previous rate cuts. As such, even a decision to maintain the current repo rate in July would likely be welcomed by the sector,' Nyika said. The fact that SA interest rates are higher than in the US is the result of many different factors, but in practical terms, it makes the country an emerging market investment destination, says Professor Waldo Krugell, an economist within the School of Economic Sciences at the North West University (NWU). He said it creates a demand for SA bonds, and by implication, for rands. 'To maintain the exchange rate, we don't want that differential to narrow too much. The implication is that if the Fed holds rates, the SARB is also more likely to hold rates,' Krugell said. He added that if the Fed does end up cutting rates later in the year and inflation stays low in SA, the country might see another cut or two and that would benefit the property sector. However, he said that there is a lot of uncertainty at the moment with real wars, trade wars and possibly a new inflation target in SA. Independent Media Property
IOL News
10 hours ago
- IOL News
What the US Fed's interest rate decision means for South Africa's property sector
Further rate cuts this year would be beneficial for property developers and investors, as well as for stimulating domestic consumption, which could, in turn, support local economic growth. Image: Tracey Adams/Independent Media The United States Federal Reserve's decision to maintain interest rates may influence the South African Reserve Bank's (SARB) Monetary Policy Committee when it meets to announce its decision on the local repo rate at the end of next month. On Wednesday night, the US Federal Reserve kept interest rates steady but signalled possible cuts later this year. Fed chairperson, Jerome Powell, warned that rising tariffs could push inflation higher and delayed any easing - much to the dismay of President Trump, said Bianca Botes, Director at Citadel Global. She said Asian markets retreated as investors grew cautious, with stocks and currencies weakening amid uncertainty over US involvement in the Israel-Iran conflict. 'Oil prices slipped after President Trump's unclear stance on the Middle East conflict. US equity futures have edged lower, while trading in Treasuries has paused for the US Juneteenth holiday. The rand is on the back foot given the current cautious setting. It starts the day at R18.04/$, R20.68/€ and R24.19/£,' Botes said on Thursday morning. Early indicators from the SARB and various economists suggest that a rate cut may be considered at the upcoming meeting, aligning with the global trend toward a monetary easing cycle, says Dr Farai Nyika, an Academic Programme Leader at the School of Public Administration of the Management College of Southern Africa (Mancosa). He said that notably, other major economies such as Switzerland and Norway have recently cut interest rates, while the United Kingdom has opted to maintain its current rates. 'The European Central Bank also reduced its rates on June 5, 2025, reinforcing the broader trend of declining interest rates,' Nyika said. The academic said further rate cuts would be beneficial for property developers and investors, as well as for stimulating domestic consumption, which could, in turn, support local economic growth. However, he said this optimistic outlook remains uncertain. With the recent geopolitical tensions, including the outbreak of hostilities between Israel and Iran, he said this may exert inflationary pressures through increased imported fuel costs. 'This phenomenon of 'imported inflation' could compel the SARB to delay any anticipated rate cuts in July. Nonetheless, the local property market is in a stronger position than it was one or two years ago, largely due to previous rate cuts. As such, even a decision to maintain the current repo rate in July would likely be welcomed by the sector,' Nyika said. The fact that SA interest rates are higher than in the US is the result of many different factors, but in practical terms, it makes the country an emerging market investment destination, says Professor Waldo Krugell, an economist within the School of Economic Sciences at the North West University (NWU). He said it creates a demand for SA bonds, and by implication, for rands. 'To maintain the exchange rate, we don't want that differential to narrow too much. The implication is that if the Fed holds rates, the SARB is also more likely to hold rates,' Krugell said. He added that if the Fed does end up cutting rates later in the year and inflation stays low in SA, the country might see another cut or two and that would benefit the property sector. However, he said that there is a lot of uncertainty at the moment with real wars, trade wars and possibly a new inflation target in SA. Independent Media Property
