Oil Climbs as Middle East Conflict Escalates: Markets Wrap

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Or sign-in if you have an account.e3cz(b0(dy1hto5d7t0]9siv_media_dl_1.png Bloomberg(Bloomberg) — Oil gained in early trading after US and Iran attacks escalated over the weekend, adding further pressure on Asian markets already rattled by a slump in chip stocks. 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The dollar was stronger against most major peers with the Australian and New Zealand currencies leading declines. Japan’s domestic markets are closed for a holiday.US forces struck Qeshm Island in the Persian Gulf and southern Iranian cities including Shadegan, Sirik and Hajiabad, Iranian media reported, with no immediate details on casualties or damage. Iran retaliated by targeting a power and water desalination plant in Kuwait, the third such attack in as many days.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe strikes extend a week of tit-for-tat strikes that have expanded beyond military targets to include bridges, utilities and ports, dimming prospects for reviving last month’s fragile ceasefire. Tehran said Saturday it would no longer abide by the interim peace deal, while Foreign Minister Abbas Araghchi said some disputes over Iran’s nuclear program may remain “unresolvable.”The escalation in the Middle East is unnerving already jittery markets, after a selloff in tech stocks gathered pace on worries that the artificial-intelligence spending spree is becoming harder to justify. “The dynamic is likely to be acutely felt in Asian markets today,” Kyle Rodda, a senior analyst at Capital.com wrote in a note to clients. “Another potential jump in crude prices risks economic activity in the energy insecure region” while the drop in semiconductor stocks is “fueling a wholesale deleveraging across the world,” he wrote. The high-profile Philadelphia Stock Exchange Semiconductor Index fell into a bear market on Friday, jolted by Chinese AI startup Moonshot releasing a new AI model that upended industry perceptions of the US’s lead in the sector. The tech heavy MSCI Asia Pacific Index is on the verge of a correction, dropping more than 9% from its record high in June. “Asia’s risk backdrop continues to deteriorate,” Wee Khoon Chong, a macro strategist at BNY in Hong Kong, wrote in a note to clients. “The correction in technology shares, firmer US dollar, higher oil prices and persistent geopolitical tensions all argue for a more defensive stance.” While haven demand supported the dollar in early trading, Treasuries may face pressure when trading begins in London as the more than 20% rally in oil prices this month restokes inflation fears. With Fed Chair Kevin Warsh making clear that the central bank’s priority is to pull down inflation, traders will also look to this week’s activity data for signs of a resilient US economy to cement expectations of a rate hike in September or October. This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.The “US dollar can gain upside traction this week if the July PMI data reinforces the US economic outperformance story,” Elias Haddad, global head of markets strategy at Brown Brothers Harriman, wrote in note to clients. Some of the main moves in markets:S&P 500 futures were steady as of 7 a.m. Tokyo timeThe euro was little changed at $1.1429The Japanese yen was little changed at 162.48 per dollarThe offshore yuan was little changed at 6.7768 per dollarThe Australian dollar fell 0.2% to $0.6970Bitcoin fell 0.2% to $64,364.78Ether fell 0.3% to $1,860.21West Texas Intermediate crude rose 2.2% to $84.32 a barrelSpot gold fell 0.3% to $4,003.58 an ounceNotice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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