By Mike Dolan
March 10 –
What’s important in the US and international markets today
By Mike Dolan, Editor-in-Chief, Finance and Markets
The darkness of war is darkness. Crude oil prices have been unusually volatile this week, with intraday swings exceeding $30 per barrel — some of the biggest one-day moves on record.
After rising as high as $120 early Monday – the highest in four years – oil prices later fell back below $100 after President Trump again played down the possibility of a short-term conflict with Iran, saying the war was “too complete”.
I’ll get to that and more below.
But first, check out my last column on why inflation isn’t the only risk keeping central bankers up at night as the conflict in Iran continues.
And listen to the latest episode of the Daily Morning Bid podcast where I discuss how headline-driven oil swings are resetting stocks, bonds and price expectations.
Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.
Oil burning comfort
Trump’s apparent about-face on Monday calmed not only oil prices but also a complex of global stocks and bonds, which had been reeling after a tripling in oil prices. Wall Street stocks closed lower on Monday, while South Korea’s KOSPI index rose nearly 6% and Japan’s Nikkei rose nearly 3% on Tuesday.
Meanwhile, US Treasury yields fell and the dollar took a breather on Tuesday, holding steady against major currencies, helping gold in turn. US stock futures were higher ahead of the bell, remaining largely calm amid yesterday’s turmoil.
Many will say this is a TACO (“Trump Always Chickens Out”) trade, but there are signs that Trump’s optimistic turnaround is playing out on the ground, with Iran’s Islamic Revolutionary Guard Corps still insisting that continued US-Israeli attacks will not export any oil.
In response, Trump threatened on social media that if Iran continues to disrupt the flow of oil through the Strait of Hormuz, they will retaliate. So, for now, it looks set to continue for Tate.
Through it all, oil prices have held above $90 per barrel – a level that would have been feared just last month. And the impact of rising oil costs is already being felt in the United States, where more relaxed Americans now believe prices will worsen next year.
In the background, G7 finance ministers on Monday considered a possible joint release of their oil reserves to calm the horses, although they have now refrained from doing so, a G7 official told Reuters that the decision was “just a matter of time”.
