Public Markets 3d Briefing
×Oil Shock Rocks Global Markets
Oil wsj.com surged above $100 a barrel for the first time since 2022 as the Iran war entered its second week, triggering a 7% plunge in Japan's Nikkei and sending shockwaves through emerging markets. The S&P 500 bloomberg.com futures dropped 0.6% as traders braced for Friday's jobs report amid inflationary concerns. Goldman Sachs bloomberg.com reported that hedge funds are adding short bets on US stocks, wagering on more pain ahead as Middle East tensions show few signs of subsiding.
Emerging Markets Under Pressure
EM stocks bloomberg.com dropped more than 10% from their recent peak as escalating Middle East tensions drove oil prices sharply higher and dented risk appetite. Indonesian stocks bloomberg.com and the rupiah slid toward new bearish milestones, compounding concerns over the country's investability and policy direction. South Korean equities bloomberg.com fell as rising oil prices prompted investors to further reduce risk exposure. Qatar LNG bloomberg.com production halt erased the 2026 supply surplus, according to Morgan Stanley, as several LNG shipments diverted toward Asia from their course to Europe.
Currency and Bond Market Turmoil
The yen wsj.com could weaken to 159.30 against the dollar this week amid Middle East tensions. Chinese sovereign bonds bloomberg.com slumped on Monday, joining a global debt selloff as surging oil prices spur concern over imported inflation. Bond traders bloomberg.com already had their hands full before the war broke out, with Treasuries paring their biggest weekly loss since April on labor and oil angst. Czech wage growth bloomberg.com unexpectedly accelerated in the fourth quarter, dealing a fresh blow to chances that the central bank will be able to cut interest rates this year.
Energy Sector Winners and Losers
Saudi Aramco bloomberg.com jumped the most since April 2023 on Sunday as the Iran war entered its second week, prompting supply disruptions that may send oil prices higher when global markets reopen. Aluminum bloomberg.com rose to the highest in almost four years as escalating hostilities in the Middle East worsened the supply outlook from the region. Chicago soybean oil bloomberg.com prices futures surged more than 4% at the open, as a spike in energy prices driven by the conflict in the Middle East lifts demand for crops used in biofuel production.
Fed and Economic Policy Response
Federal Reserve Governor Christopher Waller bloomberg.com discussed the potential inflationary impact of war with Iran, US payrolls, ongoing risks from tariffs, and his view of private credit markets. Veteran strategist Ed Yardeni raised the odds of a US market meltdown to 35% on Iran war concerns, updating his outlook for what he describes as a growing risk of a sharp selloff this year. The Trump administration announced a $20 billion reinsurance program aimed at reviving shipping in the Strait of Hormuz, where traffic has all but stopped amid US and Israeli attacks on Iran.
Regional Market Impacts
Japan equities bloomberg.com are set to decline following global peers as oil surged amid the conflict in the Middle East. A gauge of fear in Japanese stock markets bloomberg.com has surged to the highest level since the Covid crisis in 2020 as a sharp spike in oil prices dampens optimism about the country's economic outlook. Taiwan bloomberg.com has set a weekly cap on oil-price increases as it seeks to cushion the economy from the impact of the Middle East war. Brazil's antitrust authority bloomberg.com has approved a proposed transaction that would allow asset manager IG4 Capital to buy a controlling stake in petrochemicals producer Braskem SA.
Supply Chain and Shipping Disruptions
Reinsurers bloomberg.com of ships are canceling their coverage of war risk and demanding 200% more to reinstate policies after a US submarine sank an Iranian vessel. Iraq's oil production bloomberg.com has collapsed by about 60% as the Iran war means there aren't enough tankers to load the nation's crude. UAE and Kuwait bloomberg.com started reducing oil production as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Swiss bloomberg.com want to continue talks with the US on a legally binding trade agreement even after the Supreme Court scrapped the legal base for most of Donald Trump's sweeping tariffs.
Corporate and Investment Moves
Starboard Value wsj.com is pushing French-fry maker Lamb Weston to speed up improvements and cost cutting to boost its underperforming stock. KKR ft.com eyes a multibillion-dollar sale of data center cooling company Cool IT Systems as the AI boom boosts valuations. Chobani bloomberg.com expects its revenue and earnings to swell this year as the Greek yogurt maker plans to spend heavily on growth. Novo Nordisk bloomberg.com plans to sell its weight-loss drugs on Hims & Hers Health Inc.'s platform, ending a highly public feud between the two companies.
Metals and Commodities
Gold bloomberg.com fell, pressured by a stronger US dollar and inflationary risks, as the war in the Middle East extended into a second week and oil surged above $100 a barrel. Crude prices bloomberg.com in Europe are now surging as aggressive buying by Asian refiners tightens the global market. A huge aluminum options trade bloomberg.com has come into the money this week as the war in Iran sparked a sharp rally in prices. Energy markets wsj.com were rocked this week by the outbreak of war in the Persian Gulf, where roughly one-fifth of the world's oil supply originates.