Public Markets 8-Hour Briefing
×Market Turmoil
Global bond markets tumbled in Asian trading Monday as an oil price shock prompted investors to price in higher inflation and a deteriorating economic growth outlook. Emerging-market stocks dropped more than 10% from their recent peak as escalating Middle East tensions drove oil prices sharply higher and dented risk appetite. Most emerging-market currencies also fell, with Indonesia's rupiah hitting its weakest intraday level against the dollar.
Oil Shock
Oil prices surged past $110 a barrel as the Middle East's largest producers curb their output and the war in Iran continues. Saudi Aramco has offered prompt crude supply through a series of rare tenders, as the effective closure of the Strait of Hormuz traps shipments and forces a rerouting of flows via the Red Sea. South Korea President Lee Jae Myung called for the quick launch of a cap on fuel prices as the government moves to contain a spike in energy costs triggered by escalating conflict in the Middle East.
Equity Markets
Asian markets tumbled on Monday as Middle East tensions and spiking oil prices sparked a mass exit from the region's previously booming stocks. Japan's Nikkei Stock Average slid 7.0% as a sharp spike in oil prices dampens optimism about the country's economic outlook. South Korean equities fell as escalating Middle East tensions and rising oil prices prompted investors to further reduce risk exposure.
Corporate Moves
Agilent Technologies agreed to acquire privately held Biocare Medical, which makes instruments and materials used in cancer research, in an all-cash transaction valued at $950 million. UBS Group increased its bonus pool for last year by 10% as the Credit Suisse integration nears its end, while keeping Chief Executive Officer Sergio Ermotti's compensation at the same level. Fosun International shares reversed losses to climb as much as 2.2% in Hong Kong after controlling shareholders pledged to boost their holdings, easing investor concerns over a forecast fivefold increase in losses.
Economic Impact
China's consumer-price growth accelerated to the quickest in over three years and factory deflation moderated again, after a rally in energy markets and as household spending boomed during a later-than-usual Lunar New Year holiday. UBS analysts estimate lenders' profits could fall by 4% to 8% in the year to March 2027 due to the oil price spike. 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 as the escalating war in Iran hurts global markets.
Metals & Commodities
Aluminum 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 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. Bitcoin fell to its lowest price in a week during early Asia trading, as oil prices surged due to the escalating war with Iran.
Policy Responses
Taiwan has set a weekly cap on oil-price increases as it seeks to cushion the economy from the impact of the Middle East war. Vietnam will remove import tariffs on fuel and make it easier for state giant Petro Vietnam to buy and sell crude and oil products, as an expanding war in the Middle East heightens energy-security worries. G-7 finance ministers will discuss a possible joint release of oil from reserves coordinated with the International Energy Agency.