Asian shares are mixed and oil gains as world waits to see if US will join Israel's war against Iran
MANILA, Philippines (AP) — Crude oil prices rose and Asian shares were trading mixed on Friday as investors awaited more clarity on whether or not the U.S. will join Israel's war against Iran.
U.S. futures edged lower after Wall Street was closed on Thursday for the Juneteenth holiday.
U.S. benchmark crude oil added 15 cents to $73.65 per barrel, while Brent crude, the international standard was up 19 cents at $76.89 per barrel.
Oil prices have been gyrating as fears rise and ebb that the conflict between Israel and Iran could disrupt the global flow of crude. Iran is a major producer of oil and also sits on the narrow Strait of Hormuz, through which much of the world's crude passes.
Investors remained wary after the White House said President Donald Trump could decide on whether to launch an attack on Israel within the next two weeks, but that he 'still believes diplomacy is an option,' said Anderson Alves, a trader at ActivTrades.
Trump's tariffs agenda remains another major factor weighing on markets.
Tokyo's Nikkei 225 index edged 0.1% higher to 38,538.14 after Japan reported that its core inflation rate, excluding volatile food prices, rose to 3.7% in May, adding to challenges for Prime Minister Shigeru Ishiba's government and the central bank.
'Core Japanese inflation rose more than expected in May. Even so, the Bank of Japan is likely to prioritize the negative impact of U.S. tariffs, Min Joo Kang of ING Economics said in a commentary. 'For now, it's more concerned about the risk that US trade policies could break the virtuous circle of wage growth and inflation.'
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Hong Kong's Hang Seng index jumped 1.2% to 23,504.59, while the Shanghai Composite gained 0.1%, reversing earlier losses, to 3,364.83. China's central bank kept its key 1-year and 5-year loan prime rates unchanged, as expected.
Australia's S&P/ASX 200 shed 0.3% to 8,500.40 while South Korea's Kospi gained 1.2% to 3,014.05.
'Risk sentiments were cautious as Iran-Israel tensions continued roiling,' Mizuho Bank Ltd. said in a commentary.
On Thursday, the Bank of England kept its main interest rate at a two-year low of 4.25%, citing risks that the conflict between Israel and Iran will escalate.
The U.S. dollar slipped to 145.28 Japanese yen from 145.46 yen. The euro rose to $1.1530 from $1.1498.
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CTV News
27 minutes ago
- CTV News
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U.S. President Donald Trump, centre, stops to talk with Spanish Prime Minister Pedro Sanchez, left, and Turkiye's President Recep Tayyip Erdogan, right, as they attend a meeting of the North Atlantic Council during a summit of heads of state and government at NATO headquarters in Brussels on July 11, 2018. (AP Photo/Pablo Martinez Monsivais) BRUSSELS — The success of a key NATO summit hung in the balance on Friday, after Spain announced that it cannot raise the billions of dollars needed to meet a new defence investment pledge demanded by U.S. President Donald Trump. Trump and his NATO counterparts are meeting for two days in the Netherlands from next Tuesday. He insists that U.S. allies should commit to spending at least 5% of gross domestic product, but that requires investment at an unprecedented scale. Trump has cast doubt over whether the U.S. would defend allies that spend too little. Setting the spending goal would be a historic decision. It would see all 32 countries invest the same amount in defence for the first time. Only last week, NATO Secretary-General Mark Rutte expressed confidence that they would endorse it. But in a letter to Rutte on Thursday, Prime Minister Pedro Sánchez wrote that 'committing to a 5% target would not only be unreasonable, but also counterproductive.' 'It would move Spain away from optimal spending and it would hinder the (European Union's) ongoing efforts to strengthen its security and defence ecosystem,' Sánchez wrote in the letter, seen by The Associated Press. Spain is not entirely alone Belgium, Canada, France and Italy would also struggle to hike security spending by billions of dollars, but Spain is the only country to officially announce its intentions, making it hard to row back from such a public decision. Beyond his economic challenges, Sánchez has other problems. He relies on small parties to govern, and corruption scandals have ensnared his inner circle and family members. He's under growing pressure to call an early election. In response to the letter, Rutte's office said only that 'discussions among allies on a new defence investment plan are ongoing.' NATO's top civilian official had been due to table a new proposal on Friday to try to break the deadlock. The U.S. and French envoys had also been due to update reporters about the latest developments ahead of the summit but postponed their briefings. Rutte and many European allies are desperate to resolve the problem by Tuesday so that Trump does not derail the summit, as he did during his first term at NATO headquarters in 2018. Budget boosting After Russia's full-scale invasion of Ukraine in 2022, NATO allies agreed that 2% of GDP should be the minimum they spend on their military budgets. But NATO's new plans for defending its own territory against outside attack require investment of at least 3%. Spain agreed to those plans in 2023. The 5% goal is made up of two parts. The allies would agree to hike pure defence spending to 3.5% of GDP. A further 1.5% would go to upgrade roads, bridges, ports and airfields so that armies can better deploy, and to prepare societies for future attacks. Mathematically, 3.5 plus 1.5 equals Trump's 5%. But a lot is hiding behind the figures and details of what kinds of things can be included remain cloudy. Countries closest to Russia, Belarus and Ukraine have all agreed to the target, as well as nearby Germany, Norway, Sweden and the Netherlands, which is hosting the June 24-25 summit. The Netherlands estimates that NATO's defence plans would force it to dedicate at least 3.5% to core defence spending. That means finding an additional 16 billion to 19 billion euros (US$18 billion to $22 billion). Supplying arms and ammunition to Ukraine, which Spain does, will also be included as core defence spending. NATO estimates that the U.S. spent around 3.2% of GDP on defence last year. Dual use, making warfighting possible The additional 1.5% spending basket is murkier. Rutte and many members argue that infrastructure used to deploy armies to the front must be included, as well as building up defence industries and preparing citizens for possible attacks. 'If a tank is not able to cross a bridge. If our societies are not prepared in case war breaks out for a whole of society approach. If we are not able to really develop the defence industrial base, then the 3.5% is great but you cannot really defend yourselves,' Rutte said this month. Spain wanted climate change spending included, but that proposal was rejected. Cyber-security and counter-hybrid warfare investment should also make the cut. Yet with all the conjecture about what might be included, it's difficult to see how Rutte arrived at this 1.5% figure. The when, the how, and a cunning plan It's not enough to agree to spend more money. 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Winnipeg Free Press
43 minutes ago
- Winnipeg Free Press
The success of a key NATO summit is in doubt after Spain rejects a big hike in defense spending
BRUSSELS (AP) — The success of a key NATO summit hung in the balance on Friday, after Spain announced that it cannot raise the billions of dollars needed to meet a new defense investment pledge demanded by U.S. President Donald Trump. Trump and his NATO counterparts are meeting for two days in the Netherlands from next Tuesday. He insists that U.S. allies should commit to spending at least 5% of gross domestic product, but that requires investment at an unprecedented scale. Trump has cast doubt over whether the U.S. would defend allies that spend too little. Setting the spending goal would be a historic decision. It would see all 32 countries invest the same amount in defense for the first time. Only last week, NATO Secretary-General Mark Rutte expressed confidence that they would endorse it. But in a letter to Rutte on Thursday, Prime Minister Pedro Sánchez wrote that 'committing to a 5% target would not only be unreasonable, but also counterproductive.' 'It would move Spain away from optimal spending and it would hinder the (European Union's) ongoing efforts to strengthen its security and defense ecosystem,' Sánchez wrote in the letter, seen by The Associated Press. Spain is not entirely alone Belgium, Canada, France and Italy would also struggle to hike security spending by billions of dollars, but Spain is the only country to officially announce its intentions, making it hard to row back from such a public decision. Beyond his economic challenges, Sánchez has other problems. He relies on small parties to govern, and corruption scandals have ensnared his inner circle and family members. He's under growing pressure to call an early election. In response to the letter, Rutte's office said only that 'discussions among allies on a new defense investment plan are ongoing.' NATO's top civilian official had been due to table a new proposal on Friday to try to break the deadlock. The U.S. and French envoys had also been due to update reporters about the latest developments ahead of the summit but postponed their briefings. Rutte and many European allies are desperate to resolve the problem by Tuesday so that Trump does not derail the summit, as he did during his first term at NATO headquarters in 2018. Budget boosting After Russia's full-scale invasion of Ukraine in 2022, NATO allies agreed that 2% of GDP should be the minimum they spend on their military budgets. But NATO's new plans for defending its own territory against outside attack require investment of at least 3%. Spain agreed to those plans in 2023. The 5% goal is made up of two parts. The allies would agree to hike pure defense spending to 3.5% of GDP. A further 1.5% would go to upgrade roads, bridges, ports and airfields so that armies can better deploy, and to prepare societies for future attacks. Mathematically, 3.5 plus 1.5 equals Trump's 5%. But a lot is hiding behind the figures and details of what kinds of things can be included remain cloudy. Countries closest to Russia, Belarus and Ukraine have all agreed to the target, as well as nearby Germany, Norway, Sweden and the Netherlands, which is hosting the June 24-25 summit. The Netherlands estimates that NATO's defense plans would force it to dedicate at least 3.5% to core defense spending. That means finding an additional 16 billion to 19 billion euros ($18 billion to $22 billion). Supplying arms and ammunition to Ukraine, which Spain does, will also be included as core defense spending. NATO estimates that the U.S. spent around 3.2% of GDP on defense last year. Dual use, making warfighting possible The additional 1.5% spending basket is murkier. Rutte and many members argue that infrastructure used to deploy armies to the front must be included, as well as building up defense industries and preparing citizens for possible attacks. 'If a tank is not able to cross a bridge. If our societies are not prepared in case war breaks out for a whole of society approach. If we are not able to really develop the defense industrial base, then the 3.5% is great but you cannot really defend yourselves,' Rutte said this month. Spain wanted climate change spending included, but that proposal was rejected. Cyber-security and counter-hybrid warfare investment should also make the cut. Yet with all the conjecture about what might be included, it's difficult to see how Rutte arrived at this 1.5% figure. The when, the how, and a cunning plan It's not enough to agree to spend more money. Many allies haven't yet hit the 2% target, although most will this year, and they had a decade to get there. So an incentive is required. The date of 2032 has been floated as a deadline. That's far shorter than previous NATO targets, but military planners estimate that Russian forces could be capable of launching an attack on an ally within 5-10 years. The U.S. insists that it cannot be an open-ended pledge, and that a decade is too long. Still, Italy says it wants 10 years to hit the 5% target. Another issue is how fast spending should be ramped up. 'I have a cunning plan for that,' Rutte said. He wants the allies to submit annual plans that lay out how much they intend to increase spending by. The reasons for the spending hike For Europe, Russia's war on Ukraine poses an existential threat. A major rise in sabotage, cyberattacks and GPS jamming incidents is blamed on Moscow. European leaders are girding their citizens for the possibility of more. The United States also insists that China poses a threat. But for European people to back a hike in national defense spending, their governments require acknowledgement that the Kremlin remains NATO's biggest security challenge. The billions required for security will be raised by taxes, going into debt, or shuffling money from other budgets. But it won't be easy for many, as Spain has shown. On top of that, Trump has made things economically tougher by launching a global tariff war — ostensibly for U.S. national security reasons — something America's allies find hard to fathom.
Globe and Mail
2 hours ago
- Globe and Mail
Time to cool down? World market themes for the week ahead
Rising oil prices, Middle East tensions, a NATO meeting and a testimony by the U.S. Federal Reserve chief all vie for market attention in the days ahead. Here's your heads up on the week in world markets: The Israel/Iran war has lit the fuse for a possible oil supply shock for investors. Brent crude has topped us$75 for the first time since January. For now, there are no signs of disruption to output. Iran produces around 3.3 million barrels a day and exports around half that, according to Reuters and LSEG calculations, a fraction of the world's roughly-100 million barrels in daily consumption. A shortfall in Iranian barrels, while jarring to markets, could be offset by other OPEC countries tapping spare capacity to fill that void. What markets are more worried about is Iran blocking the Strait of Hormuz, through which some 20 per cent of total daily crude supply passes. Analysts say it's unlikely. But a lot of things that were considered unlikely six months ago and are now a reality. Market volatility has room to pick up. European foreign ministers were set to meet their Iranian counterpart on Friday aiming to create a pathway back to diplomacy over its contested nuclear program despite the U.S. considering joining Israeli strikes against Iran. NATO aims to keep Donald Trump happy, hold the alliance together and agree a big new spending target in The Hague. It's also hoping the Israel-Iran conflict won't overshadow Wednesday's summit. Trump lambasted NATO members in his first term and threatened to quit the military alliance if they did not raise defence spending. Now, NATO boss Mark Rutte wants all allies to commit to Trump's proposed target of 5 per cent of GDP. To do that, NATO will interpret defence more broadly. It would hike its current target of spending 2 per cent of GDP on traditional defence – weapons, troops etc – to 3.5 per cent. And members would spend at least 1.5 per cent of GDP on broader measures such as adapting roads, bridges and ports to handle military vehicles and protecting against cyber-attacks. Only Spain is publicly opposing the new target. Due to the focus on pleasing Mr. Trump, Ukrainian President Volodymyr Zelenskiy may have to settle for a seat at the pre-summit dinner rather than the meeting itself. Markets will look to Fed boss Jerome Powell to elaborate on what his expectation for 'meaningful' inflation means for the rate outlook when he testifies before Senate and House committees on Tuesday and Wednesday. Mr. Powell told reporters after the Fed's June meeting that goods price inflation is coming as tariffs work their way to consumers. Having stressed that a solid expansion continues, Mr. Powell could also be asked how a further Middle East escalation impacts inflation. Thursday's final read on first quarter GDP meanwhile should confirm that the economy shrank. The Fed's favorite inflation indicator, the Personal Consumption Expenditures Price Index for May on Friday, will be read through the lens of the Fed's decision to leave rates alone, while predicting two cuts this year. A month ago, Japanese government bond yields surged to record peaks as investors baulked at auctions and the prime minister ill-advisedly compared Japan's fiscal predicament to Greece's. Now, things couldn't look more different thanks to some deft team play between the Bank of Japan and Ministry of Finance. Just days after the BOJ tweaked its bond taper plans to keep buying more of the super-long debt at the heart of the yield spike, the finance ministry presents a plan to cut issuance of the longest-dated securities. The BOJ's dovish tone on future rate hikes has also helped keep yields in check this week, although Governor Kazuo Ueda left the door open to policy tightening this year by highlighting the risks from broadening price pressures. Tokyo CPI for this month and published on June 27 will give fresh hints on how soon the central bank may need to act. U.S. President Donald Trump's reciprocal tariffs initially led to order front-loading, supporting global business activity, but that is fading fast with global recession creeping back up. With little forward guidance from companies, economic indicators are more vital than ever for markets, and a raft of them hit screens in days to come. Monday brings the first release of June business activity for a host of economies including the euro area, Britain and the United States. Hopes are for better news from the euro zone after May's PMI slipped to 50.2 from 50.4 in April, moving closer to the 50 mark that separates a contraction from an expansion. Particularly concerning was the bloc's dominant services sector contracting for the first time since November. Meanwhile in the UK, the May PMI showed the services sector returning to tepid growth. Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
