By Mike Dolan
March 3 –
What matters today in the US and international markets
By Mike Dolan, Editor-in-Chief, Finance and Markets
The third day of the Middle East war continues to roil global markets and there is still no indication of when or where the broader regional conflict will end – only the ongoing speculation that it will be measured in weeks, not just days.
Energy prices remain the focus of financial transactions, and crude oil is rising again as shipping, oil and gas facilities and military and civilian targets are targeted as Iran continues its weekend attacks.
I’ll get to that and more below.
But first, check out my last column on what really drove the dollar’s recent rally.
And listen to the latest episode of the Daily Breakfast Daily Podcast. Subscribe to hear Reuters journalists covering the biggest news in markets and finance seven days a week.
Hormuz turned to the bazaars
Brent crude rose to a 14-month high of $82.37 per barrel, up $10 from Friday’s close. U.S. crude hit an 8-month high of $75.55 a barrel, but markets are awaiting a planned government announcement on Tuesday to ease the impact on U.S. consumers.
The details are unclear but could include the release of US strategic petroleum reserves or some form of domestic subsidy.
A bounce back in Wall Street stocks on Monday saw the S&P 500 return to opening levels, led by the tech sector. But this program trading sense was tied to “deep buying” models trained on relatively short-term energy prices during recent Middle East conflicts.
And it looks very different. Wall Street stock index futures were down nearly 2%. Stocks across Europe and Asia fell sharply today. Japan’s Nikkei, the eurozone’s Stoxx index, and Britain’s FTSE 100 all fell about 3%, while South Korea’s high-flying Kospi fell 7% on Monday’s return to Seoul from a holiday.
Any thought of a safety bid in sovereign bonds was also quickly dispelled, with U.S. Treasury yields rising along the curve and the 10-year now up 13 basis points from Friday’s close.
Markets now don’t expect another Federal Reserve rate cut until September, and there are doubts about whether there will be a second this year – with only a 42bps cut in December.
Traders are also busily eyeing any possibility of a rate cut by the European Central Bank. Normalizing that picture was Monday’s report showing that US producers are already registering a sharp drop in oil prices to their highest level since 2022 in February – even before this latest oil increase.
