Latest news with #CharuChanana
Kuwait Times
4 days ago
- Business
- Kuwait Times
Shares dither, oil spikes as investors mull Iran risks
LONDON: World shares slipped on Monday and oil prices rose towards five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with knock-on risks to global trade and inflation. Equities remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds. Oil prices whipsawed, rising to their highest since January during Asia trading, then falling back to flat, and were last up over 1 percent. US futures pointed towards a muted open on Wall Street. S&P 500 futures ticked up 0.1 percent while Nasdaq futures steadied. 'If you can keep your head when all about you are losing theirs, maybe you don't understand the situation,' said Paul Jackson Invesco's global head of asset allocation research. 'Whether a lack of market reaction is naiveté, or a proper assessment of the situation, time will tell,' he said. European shares fell after midday with the pan-European STOXX 600 index down over 0.3 percent. Some market participants hoped Iran might back down, with its nuclear ambitions curtailed, or even that regime change might bring a less hostile government to power there. 'That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively,' said Charu Chanana, chief investment strategist at Saxo. The Strait of Hormuz is only about 33 km wide at its narrowest point and around a quarter of global oil trade and 20 percent of liquefied natural gas supplies pass through it. Analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 percent and averaging a 30 percent rise over time. Goldman Sachs warned prices could temporarily touch $110 a barrel should the critical waterway be closed for a month. For now, Brent and US crude were both up over 82 cents to $77.83 and 85 cents to $74.68 a barrel, respectively. Gold also rose 0.4 percent to $3,381 an ounce. Resilience World share markets, especially in Asia, struggled. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 percent, dragged down by shares in Taiwan which closed 1.42 percent lower, while Chinese blue chips closed higher 0.3 percent and Japan's Nikkei eased 0.1 percent. Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain. The main buyers of Iranian oil are Chinese private refiners, some of whom have recently been placed on the US Treasury sanctions list. There is little evidence, however, that this has impacted flows from Iran to China significantly. The dollar firmed 1.25 percent against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.5 percent to $1.1466. The dollar index firmed marginally to 99.299. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about 2 basis points to 4.389 percent. Markets are still pricing only a slim chance the Fed will cut rates at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy, leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from lawmakers, which will likely cover US tariffs and the attack on Iran's nuclear sites. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe. — Reuters
Mid East Info
4 days ago
- Business
- Mid East Info
Making sense of the US–Iran conflict for investors – Saxo Bank MENA - Middle East Business News and Information
Charu Chanana, Chief Investment Strategist, Saxo Bank Markets were jolted this weekend as the US, under President Trump, launched airstrikes on three key Iranian nuclear sites, marking a historic escalation in Middle East tensions. The move came without Congressional approval, raising not just geopolitical risk—but also questions about US institutional stability and global investor confidence in US leadership. While the full scope of Iran's retaliation remains unclear, one key lever is already in focus: the Strait of Hormuz, a narrow passage controlling roughly 1 in 5 barrels of daily global oil flows. Iran doesn't need to shut it down completely; the threat alone is enough to stir markets, pressure inflation expectations, and ripple through asset classes. Markets now face overlapping risks: energy disruption, inflation shock, delayed rate cuts, and rising global macro uncertainty. Why this is not the time for complacency President Trump's decision to bomb Iran's nuclear sites over the weekend casts a shadow over the outlook for equities and other risk-sensitive assets. While the market's initial reaction appears contained, investors should be cautious about becoming complacent. Here's why: Oil markets are under pressure, not relaxed: Monday's oil spike may have faded somewhat intraday, but the broader trend reflects building pressure on global energy supply chains. Even without a direct shutdown of the Strait of Hormuz, higher shipping costs and insurance premiums could lift energy prices in a more sustained way. Crude prices + global fragility = macro risk: A sustained rise in oil prices alongside weak global growth could create renewed stagflation fears — a classic headwind for equities and consumer sentiment. Rate cuts could be delayed : Central banks may become more cautious about easing too quickly if rising energy costs drive inflation expectations higher. In the US, that comes on top of already sticky inflation and tariff-related concerns, along with institutional risks with President Trump pushing the Fed to cut rates and raising questions about policy independence. Policy unpredictability is a risk in itself: Trump's abrupt pivot from 'wait and see' to launching strikes reinforces a sense of strategic instability. For businesses and investors, that raises the bar for deploying long-term capital with confidence. What to watch next Iran's response: A direct strike on US forces or the Strait of Hormuz would be an inflection point for markets. Oil price trajectory: A sustained move above $100/bbl would drive inflation shock trades. US bond market reaction: Whether yields fall on haven demand or rise on inflation fears will shape broader asset flows. Dollar dynamics: Watch if this becomes a full-blown short squeeze in the dollar, tightening financial conditions globally. Global equity rotation: Asian and European markets, especially energy importers, may struggle. Defense and energy sectors are likely to be more resilient. Portfolio strategy considerations for investors Not investment advice — just clarity on key exposures and potential implications as uncertainty rises. Energy exposure may provide a hedge Energy producers may benefit from higher oil prices. Energy equity ETFs offer diversified access to oil majors and service companies — without needing to trade crude futures directly. Defense and gold miners can reflect geopolitical uncertainty Defense contractors and gold miners may gain more attention if tensions escalate further. These sectors have historically been sought out during geopolitical flare-ups and rising inflation concerns, and offer resilience in the face of volatility especially if portfolios have more relative cyclical exposure to say tech or consumer discretionary. Gold's classic hedge qualities may, however, come under the scanner if yields rise or dollar strengthens significantly. Be cautious on EM Asia and European exposure Countries with high oil import dependency — such as India, Thailand, the Philippines, and much of Europe — could face multiple headwinds: rising energy costs, weaker currencies, and capital outflows. Growth concerns in these regions may become more pronounced if energy prices remain elevated. By contrast, the U.S., as a net energy exporter, may be relatively more insulated from rising oil prices in economic terms, though not immune to broader market volatility. Review high-growth exposure Sectors sensitive to interest rates and input costs—like high-growth tech or early-stage innovation—could face margin pressure and valuation resets if rate cuts are delayed and inflation expectations rise. This doesn't mean exit, but reflect on your time horizon and risk tolerance — especially if you're highly concentrated. Fixed income for balance Short-duration bond funds or flexible strategies may help reduce interest rate sensitivity while still offering yield, especially if long-end bond markets get whipsawed by competing inflation and haven narratives.
The Advertiser
5 days ago
- Business
- The Advertiser
Shares and oil dither, as investors mull Iran risks
World shares slipped and oil prices briefly hit five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with fallout risks to global trade and inflation. Markets remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds. Oil prices were up just 0.4 per cent, after rising as much as 5.7 per cent overnight. "If you can keep your head when all about you are losing theirs, maybe you don't understand the situation," said Paul Jackson Invesco's global head of asset allocation research. "Whether a lack of market reaction is naiveté, or a proper assessment of the situation, time will tell," he said. European shares fell on Monday with the pan-European STOXX 600 index down 0.2 per cent. Some market participants hoped Iran might back down, with its nuclear ambitions curtailed, or even that regime change might bring a less hostile government to power there. "That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively," said Charu Chanana, chief investment strategist at Saxo. The Strait of Hormuz is only about 33 km wide at its narrowest point and around a quarter of global oil trade and 20 per cent of liquefied natural gas supplies pass through it. Analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 per cent and averaging a 30 per cent rise over time. Goldman Sachs warned prices could temporarily touch $US110 ($A171) a barrel should the critical waterway be closed for a month. For now, Brent and US crude were both up 0.4 per cent at $US77.32 ($A120.45) and $US74.10 ($A115.43) a barrel, respectively. Gold also remained mostly steady at $US3365 ($A5242) an ounce. World share markets looked moderately resilient, with S&P 500 futures and Nasdaq futures both up 0.2 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 per cent, dragged down by shares in Taiwan which closed 1.42 per cent lower, while Chinese blue chips closed higher 0.3 per cent and Japan's Nikkei eased 0.1 per cent. Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain. The dollar firmed 1.25 per cent against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.2 per cent to $1.1497. The dollar index firmed marginally to 99.339. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about two basis points to 4.389 per cent. Markets are still pricing only a slim chance the Fed will cut rates at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy, leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from Congress, which will likely cover US tariffs and the attack on Iran's nuclear sites. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe. World shares slipped and oil prices briefly hit five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with fallout risks to global trade and inflation. Markets remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds. Oil prices were up just 0.4 per cent, after rising as much as 5.7 per cent overnight. "If you can keep your head when all about you are losing theirs, maybe you don't understand the situation," said Paul Jackson Invesco's global head of asset allocation research. "Whether a lack of market reaction is naiveté, or a proper assessment of the situation, time will tell," he said. European shares fell on Monday with the pan-European STOXX 600 index down 0.2 per cent. Some market participants hoped Iran might back down, with its nuclear ambitions curtailed, or even that regime change might bring a less hostile government to power there. "That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively," said Charu Chanana, chief investment strategist at Saxo. The Strait of Hormuz is only about 33 km wide at its narrowest point and around a quarter of global oil trade and 20 per cent of liquefied natural gas supplies pass through it. Analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 per cent and averaging a 30 per cent rise over time. Goldman Sachs warned prices could temporarily touch $US110 ($A171) a barrel should the critical waterway be closed for a month. For now, Brent and US crude were both up 0.4 per cent at $US77.32 ($A120.45) and $US74.10 ($A115.43) a barrel, respectively. Gold also remained mostly steady at $US3365 ($A5242) an ounce. World share markets looked moderately resilient, with S&P 500 futures and Nasdaq futures both up 0.2 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 per cent, dragged down by shares in Taiwan which closed 1.42 per cent lower, while Chinese blue chips closed higher 0.3 per cent and Japan's Nikkei eased 0.1 per cent. Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain. The dollar firmed 1.25 per cent against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.2 per cent to $1.1497. The dollar index firmed marginally to 99.339. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about two basis points to 4.389 per cent. Markets are still pricing only a slim chance the Fed will cut rates at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy, leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from Congress, which will likely cover US tariffs and the attack on Iran's nuclear sites. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe. World shares slipped and oil prices briefly hit five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with fallout risks to global trade and inflation. Markets remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds. Oil prices were up just 0.4 per cent, after rising as much as 5.7 per cent overnight. "If you can keep your head when all about you are losing theirs, maybe you don't understand the situation," said Paul Jackson Invesco's global head of asset allocation research. "Whether a lack of market reaction is naiveté, or a proper assessment of the situation, time will tell," he said. European shares fell on Monday with the pan-European STOXX 600 index down 0.2 per cent. Some market participants hoped Iran might back down, with its nuclear ambitions curtailed, or even that regime change might bring a less hostile government to power there. "That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively," said Charu Chanana, chief investment strategist at Saxo. The Strait of Hormuz is only about 33 km wide at its narrowest point and around a quarter of global oil trade and 20 per cent of liquefied natural gas supplies pass through it. Analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 per cent and averaging a 30 per cent rise over time. Goldman Sachs warned prices could temporarily touch $US110 ($A171) a barrel should the critical waterway be closed for a month. For now, Brent and US crude were both up 0.4 per cent at $US77.32 ($A120.45) and $US74.10 ($A115.43) a barrel, respectively. Gold also remained mostly steady at $US3365 ($A5242) an ounce. World share markets looked moderately resilient, with S&P 500 futures and Nasdaq futures both up 0.2 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 per cent, dragged down by shares in Taiwan which closed 1.42 per cent lower, while Chinese blue chips closed higher 0.3 per cent and Japan's Nikkei eased 0.1 per cent. Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain. The dollar firmed 1.25 per cent against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.2 per cent to $1.1497. The dollar index firmed marginally to 99.339. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about two basis points to 4.389 per cent. Markets are still pricing only a slim chance the Fed will cut rates at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy, leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from Congress, which will likely cover US tariffs and the attack on Iran's nuclear sites. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe. World shares slipped and oil prices briefly hit five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with fallout risks to global trade and inflation. Markets remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds. Oil prices were up just 0.4 per cent, after rising as much as 5.7 per cent overnight. "If you can keep your head when all about you are losing theirs, maybe you don't understand the situation," said Paul Jackson Invesco's global head of asset allocation research. "Whether a lack of market reaction is naiveté, or a proper assessment of the situation, time will tell," he said. European shares fell on Monday with the pan-European STOXX 600 index down 0.2 per cent. Some market participants hoped Iran might back down, with its nuclear ambitions curtailed, or even that regime change might bring a less hostile government to power there. "That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively," said Charu Chanana, chief investment strategist at Saxo. The Strait of Hormuz is only about 33 km wide at its narrowest point and around a quarter of global oil trade and 20 per cent of liquefied natural gas supplies pass through it. Analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 per cent and averaging a 30 per cent rise over time. Goldman Sachs warned prices could temporarily touch $US110 ($A171) a barrel should the critical waterway be closed for a month. For now, Brent and US crude were both up 0.4 per cent at $US77.32 ($A120.45) and $US74.10 ($A115.43) a barrel, respectively. Gold also remained mostly steady at $US3365 ($A5242) an ounce. World share markets looked moderately resilient, with S&P 500 futures and Nasdaq futures both up 0.2 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 per cent, dragged down by shares in Taiwan which closed 1.42 per cent lower, while Chinese blue chips closed higher 0.3 per cent and Japan's Nikkei eased 0.1 per cent. Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain. The dollar firmed 1.25 per cent against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.2 per cent to $1.1497. The dollar index firmed marginally to 99.339. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about two basis points to 4.389 per cent. Markets are still pricing only a slim chance the Fed will cut rates at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy, leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from Congress, which will likely cover US tariffs and the attack on Iran's nuclear sites. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe.
Business Times
5 days ago
- Business
- Business Times
US attack on Iran: Market reaction muted, but brace for more volatility ahead, say analysts
[SINGAPORE] Markets reacted in a more muted manner than expected on Monday (Jun 23) after the US launched strikes against three nuclear facilities in Iran over the weekend. But analysts warned that there could be more volatility ahead as the world awaits Iran's reaction. US President Donald Trump announced strikes against three Iranian nuclear facilities on Sunday (Jun 22), boosting Israel's efforts to destroy Iran's nuclear programme. This followed more than a week of Israeli air attacks on Iran's nuclear and military facilities and the US' attempts to persuade Iran to reach a deal to dismantle its nuclear programme. In response, Iran threatened US bases in the Middle East, intensifying concerns over a deepening of conflict in the region. Markets in the Asia-Pacific tumbled slightly initially, but by Monday's close, had recovered most of their losses – a reaction that was not as severe as when Israel first launched attacks. US futures rose marginally ahead of Monday's trading session. Hong Kong's Hang Seng Index closed up 0.6 per cent after earlier losses; on the mainland, the CSI 300 Index ended 0.3 per cent higher. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Japan's Nikkei 225 ended Monday's session around 0.1 per cent lower, and South Korea's Kospi closed 0.2 per cent down. Australia's ASX closed nearly 0.4 per cent lower. Oil prices gained initially, but were soon pared back. On Monday afternoon, they were still at levels higher than before the Jun 13 Israel attacks, with West Texas Intermediate (WTI) at a gain of around 8 per cent, and Brent at 10 per cent higher. Oil markets The spike in oil prices may have faded slightly somewhat intraday on Monday, but the broader trend reflects building pressure on global energy supply chains, said Charu Chanana, chief investment strategist at Saxo. 'Even without a direct shutdown of the Strait of Hormuz, higher shipping costs and insurance premiums could lift energy prices in a more sustained way,' she said. The Strait of Hormuz is a major trading route through which around a fifth of global oil and gas flows. Ipek Ozkardeskaya, senior analyst at Swissquote Bank, also noted that it takes a number of days to a few weeks to meaningfully disrupt global oil flows. 'A weakened Iran, if left with no other options, could still go down that road,' she cautioned. A sustainable jump in oil prices – to around US$100 a barrel for a few months – could have wider implications for the global economy by boosting inflation and preventing central banks from further easing; this would, in turn, weigh on production, business activity and growth, Ozkardeskaya said. OCBC's Vasu Menon said that, historically, past Middle East flashpoints may have caused oil prices to spike initially, but eventually failed to produce a lasting market reaction, partly because the feared impact and disruption to oil supply did not materialise. Equity and overall markets Menon, the bank's managing director of investment strategy and wealth management in Singapore, noted that Middle East markets ended mostly higher on Sunday, despite the US attack on Iran. 'The unfazed response from Middle East markets offers hope that the fallout for other global markets may not be dramatic ... they may not be down and out, and the response may be temporary, and a rebound could materialise eventually,' he said of global markets. Swissquote Bank's Ozkardeskaya noted it was 'extremely interesting' to note that S&P 500 futures were 'behaving like a normal Monday'. 'It really feels like markets have become increasingly unreactive to the news.' Menon added: 'A lot hinges on what Iran will do next, and whether it would sabotage oil supply in the Middle East in retaliation for the US attack. We will have to wait and watch over the next few days, or even a few weeks, to see how Iran responds. 'This may keep investors nervous and markets volatile in the short term, but may not be a game changer for markets. Of greater consequence to the markets may be the reciprocal tariffs that Trump will decide on by Jul 9,' he said. However, Menon urged investors to prepare for more volatility in the coming days and weeks. Saxo's Chanana said that markets now face 'overlapping risks': energy disruption, inflation shock, delayed rate cuts and rising global macro uncertainty. Rising inflation caused by energy disruptions could delay rate cuts by the inflation-sensitive US Fed. 'Trump's abrupt pivot from 'wait and see' to launching strikes reinforces a sense of strategic instability. For businesses and investors, it raises the bar for deploying long-term capital with confidence,' she said. 'While the market's initial reaction appears contained, investors should be cautious about becoming complacent.' But Menon said that these developments 'may not end the global equity bull market' if they don't result in sharply higher inflation. Markets have been very resilient this year, he pointed out, despite tariff shocks and geopolitical risks. 'What's going for markets is a lot of idle liquidity on the sidelines that could provide market support, should there be sharp pullbacks.' Gold One bright spot: Gold. Menon said that the scope for safe havens like gold to continue rising is likely to stay. This comes as global uncertainties continue, while global central banks proceed with diversifying away from their US dollar holdings towards gold. 'We see gold rising to US$3,900 per ounce over a 12-month horizon,' he said. Gold's classic hedge qualities may, however, come under the scanner if yields rise or the dollar strengthens significantly, cautioned Chanana. To her, gold miners and defence contractors stand to gain more attention if tensions from the conflict escalate further. 'These sectors have historically been sought out during geopolitical flare-ups and rising inflation concerns, and offer resilience in the face of volatility, especially if portfolios have more relative cyclical exposure to, say, tech or consumer discretionary,' said the Saxo analyst.
The Star
5 days ago
- Business
- The Star
Shares slip, oil rises as investors weigh Iran risks
SYDNEY: Shares slipped in Asia on Monday and oil prices briefly hit five-month highs as investors anxiously waited to see if Iran would retaliate against U.S. attacks on its nuclear sites, with resulting risks to global activity and inflation. Early moves were contained, with the dollar getting only a minor safe-haven bid and no sign of panic selling across markets. Oil prices were up around 2.8%, but off their initial peaks. Optimists were hoping Iran might back down now its nuclear ambitions had been curtailed, or even that regime change might bring a less hostile government to power there. "Markets may be responding not to the escalation itself, but to the perception that it could reduce longer-term uncertainty," said Charu Chanana, chief investment strategist at Saxo. "That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively." The Strait of Hormuz is only about 33 km (21 miles) wide at its narrowest point and sees around a quarter of global oil trade and 20% of liquefied natural gas supplies. Analysts at JPMorgan also cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76% and averaging a 30% rise over time. "Selective disruptions that scare off oil tankers make more sense than closing the Strait of Hormuz given Iran's oil exports would be shut down too," said Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia. "In a scenario where Iran selectively disrupts shipping through the Strait of Hormuz, we see Brent oil reaching at least $100/bbl." Goldman Sachs warned prices could temporarily touch $110 a barrel should the critical waterway be closed for a month. For now, Brent was up a relatively restrained 1.8% at $78.42 a barrel, while U.S. crude rose 1.9% to $75.26. Elsewhere in commodity markets, gold edged down 0.1% to $3,363 an ounce. KEEP CALM AND CARRY ON World share markets were proving resilient so far, with S&P 500 futures off a modest 0.3% and Nasdaq futures down 0.4%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.0%, while Chinese blue chips dipped 0.2%. Japan's Nikkei eased 0.6%, though surveys showed manufacturing activity there returned to growth in June after nearly a year of contraction. EUROSTOXX 50 futures lost 0.4%, while FTSE futures fell 0.3% and DAX futures slipped 0.5%. Europe and Japan are heavily reliant on imported oil and LNG, whereas the United States is a net exporter. The dollar edged up 0.3% on the Japanese yen to 146.50 yen , while the euro dipped 0.2% to $1.1500. The dollar index firmed marginally to 98.958. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising 2 basis points to 4.395%. Futures for Federal Reserve interest rates were a tick lower, likely reflecting concerns a sustained rise in oil prices would add to inflationary pressures at a time when tariffs were just being felt in U.S. prices. Markets are still pricing only a slim chance the Fed will cut at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from lawmakers, which is certain to cover the potential impact of President Donald Trump's tariffs and the attack on Iran. The Middle East will be high on the agenda at a NATO leaders meeting at the Hague this week, where most members have agreed to commit to a sharp rise in defence spending. Among the economic data due are figures on U.S. core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe. - Reuters
