Public Markets 8-Hour Briefing
×Oil Market Turmoil
Oil prices surged past $120 a barrel as Middle East tensions escalated, triggering a global market selloff. Saudi Aramco offered prompt crude supply through rare tenders as the Strait of Hormuz effectively closed. Qatar Energy pushed back a major LNG expansion project to 2027 after a drone attack forced the closure of its Ras Laffan plant.
Global Market Impact
Asian markets tumbled on Monday as Middle East tensions and spiking oil prices sparked a mass exit from the region's previously booming stocks. South African bonds extended their worst selloff since the Covid pandemic as concern mounted that soaring oil prices and a weaker rand will fuel inflation. European blue-chip stocks fell and were set for a correction as intensifying conflict in the Middle East sent oil soaring past $100 a barrel.
Economic Policy Responses
South Korean President Lee Jae Myung called for the quick launch of a fuel price cap as the government moves to contain a spike in energy costs. Italy's Prime Minister Giorgia Meloni plans to fast-track a new law decree to tackle the spike in energy prices resulting from the war in the Middle East. Pakistan's central bank held its key policy rate citing economic uncertainty after oil prices surged.
Bond Market Disruption
Global bond markets fell on Monday as an oil price shock prompted investors to price in higher inflation and a deteriorating economic growth outlook. European banks exceeded expectations in the fourth quarter, buoyed by trading income and cost discipline, standing out in an earnings season marked by tariffs and consumer weakness.
Energy Supply Disruptions
Bahrain's main energy company declared force majeure on operations that have been impacted by the ongoing war in the Middle East. Asian energy buyers desperate to secure supplies as the Middle East war enters its second week are outbidding rivals to lure fuel shipments that were headed to other regions. Mainland Chinese investors purchased a record HK$37.2 billion worth of Hong Kong shares through a key trading link on Monday, reversing their unprecedented sale last week.
Corporate Developments
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. Victory Giant Technology is preparing for a Hong Kong listing that may raise more than $2 billion. iA Financial Corp is hunting for a multibillion-dollar acquisition after the firm reached a record valuation at the beginning of the year.
Geopolitical Implications
China's investments in the Middle East face billions of dollars at risk as the war widens. European natural gas prices jumped as the war in the Middle East continues to rock energy markets and disrupt shipments of seaborne supplies. German industrial production and factory orders both fell at the start of the year, tempering hopes for a swift recovery that's also set to face further headwinds from the war in Iran.
Market Technical Analysis
A record volume of so-called illicit crude is being held on tankers off China's coast, representing a potential buffer for the country's private refiners as the war in the Middle East disrupts wider flows. 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. Banks are likely to face higher costs in issuing significant risk transfers as investors become more demanding in the face of growing economic uncertainty.