Asian markets drift as Trump mulls Iran strike, oil rises 4% this week; BOJ faces rate hike pressure
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Asian share markets remained uncertain Friday as concerns grew over a possible US military strike on Iran, while oil prices were on track for their third consecutive weekly gain amid rising tensions between Israel and Iran.
Overnight, Israel bombed nuclear targets inside Iran, prompting retaliatory missile and drone strikes from Tehran. The intensified week-long air war has shown no signs of de-escalation, fueling market unease.
Despite Brent crude slipping 2% to $77.22 per barrel on Friday, it is still headed for a 4% weekly rise, following a sharp 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, noting past examples like decisions on Russia, Ukraine, and tariffs.
'There is certainly a risk of this happening again, given the complexities of the situation."
US markets were closed for the Juneteenth holiday, offering little guidance for Asia. Futures trading in Nasdaq and S&P 500 both dipped 0.3% in Asian hours, reported news agency Reuters.
MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1% but is set for a 1% weekly decline. Japan's Nikkei dropped 0.2%.
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China's blue-chip index rose 0.3%, and Hong Kong's Hang Seng climbed 0.5% after the People's Bank of China held benchmark lending rates steady, as expected.
In currency markets, the US dollar slipped 0.2% to 145.17 yen following data showing Japan's core inflation hit a two-year high in May. While this added pressure on the Bank of Japan to hike rates, investors largely expect no move until December, with only a 50% probability priced in.
The US bond market reopened in Asia after Thursday's closure. Ten-year Treasury yields remained flat at 4.389%, while two-year yields dropped two basis points to 3.925%.
In global central bank developments, the Swiss National Bank cut rates to zero, leaving open the possibility of negative rates. The Bank of England held steady but signaled further easing may be needed, while Norway's central bank surprised markets with its first rate cut since 2020.
Gold prices fell 0.2% to $3,363 per ounce and are on track for a weekly loss of 2%.
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Time of India
31 minutes ago
- Time of India
Near-term impact of Iran Israel conflict on most Indian firms is expected to be limited, says Crisil
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It added, "Also, prolonged and increasing uncertainties can result in a rise in air/sea freight cost and insurance premiums for export/import-based sectors, so will bear watching." According to Crisil, India's direct trade with Israel and Iran is minuscule at less than 1% of the total trade involving India last fiscal. While India's major export to Iran is basmati rice, trade with Israel is more diversified, and includes fertilisers, diamonds and electrical equipment. The data with Crisil shows that Iran and Israel accounted for about 14% to India's basmati rice exports in fiscal 2025. Live Events "But because basmati rice is a staple, the impact on demand because of the ongoing tensions is likely to be limited. Additionally, India's ability to export to other countries in the Middle East, the US and Europe reduces demand risk. But a prolonged crisis can lead to possible delays in payment from counterparties in these regions, elongating the working capital cycle," the release stated. For domestic diamond polishers, Israel is mainly a trading hub, accounting for about 4% of the total diamond exports last fiscal. Additionally, about 2% of all rough diamonds imported are from Israel. "Polishers also have alternative trading hubs such as Belgium and the United Arab Emirates, with ultimate buyers based in the US and Europe, which will help them to manage any adverse impact on the sector," said Crisil. As for the fertiliser sector, Israel is a major global producer of muriate of potash (MoP) and was one of the larger exporters to India last fiscal ( about 7% of India's MoP imports). "However, the share of MoP (as a final product or as an ingredient in other fertilisers) remains low at less than 10% of domestic fertiliser consumption. India's ability to source MoP from other countries also lowers the supply risk and will limit any material impact on the sector," the release said. 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"For flexible packaging and synthetic textile firms, while over 70-80% of production cost is crude linked, the impact of an increase in its price could be moderate due to the improved demand-supply scenario and firm's ability to pass on cost to customers, albeit with a slight lag," the release said. According to Crisil, the near-term impact on most Indian firms is expected to be limited, with low capex intensity and balance sheet strength of companies offering cushion from potential vulnerabilities. "However, a prolonged escalation could aggravate the impact mainly due to rise in oil prices and disruption in supply chains which could stoke inflation," it cautioned.
Time of India
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Time of India
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