US futures Asian shares open lower oil prices soar as US and Israeli attack Iran

Bangkok, Mar 2 (AP) The US and Israeli attacks on Iran rattled world markets on Monday, with US futures initially falling more than 1 per cent and oil prices soaring, though both moderated as trading picked up.
     The futures for the S&P 500 and Dow Jones Industrial Average were down about 0.8 per cent by mid-morning in Bangkok.
     Asian shares opened lower.
     Japan's Nikkei 225 index initially fell more than 2 per cent, but by midday Tokyo time it was down 1.5 per cent at 57,981.54.
     In Hong Kong, the Hang Seng lost 1.6 per cent to 26,215.91, and the Shanghai Composite index was flat at 4,163.01.
     Taiwan's benchmark lost 0.6 per cent and Singapore's dropped 1.9 per cent. In Bangkok, the SET fell 2.1 per cent.
     Australia's S&P/ASX 200 shed 0.3 per cent to 9,173.50.
     Markets were closed in South Korea for a holiday.
     The price of gold, usually viewed as a safe haven for investment in times of uncertainty, rose 2.4 per cent to about USD 5,371 per ounce.
     Traders were betting the supply of oil from Iran and elsewhere in the Middle East would slow or grind to a halt. Attacks throughout the region, including on two vessels travelling through the Strait of Hormuz, the narrow mouth of the Persian Gulf, have restricted countries' ability to export oil to the rest of the world.
     “Roughly one-fifth of global oil and LNG (liquefied natural gas) flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system,” Stephen Innes of SPI Asset Management said in a commentary.
     The price of a barrel of US benchmark crude oil initially surged about 8 per cent. It later traded 5.9 per cent higher at USD 71.00 per barrel. Brent crude jumped 6.2 per cent to USD 77.38 per barrel.
     A prolonged war would likely result in higher prices for other fuels and gasoline and could cascade throughout the global economy, adding to production costs overall.
     Likewise, prolonged interruptions to oil flows through the Middle East would have “huge implications for oil and LNG and every market everywhere if it occurs. Energy is an input to ALL production,” RaboResearch Global Economics & Markets said in a report.
     Iran exports roughly 1.6 million barrels of oil a day, mostly to China. It may need to look elsewhere for supply if Iran's exports are disrupted, another factor that could increase energy prices.
     But China has ample oil reserves of up to 1.5 billion barrels, and it can offset a decline in oil from Iran by increasing imports from Russia, said Michael Langham of Aberdeen Investments.
     The attacks were anticipated, with a massive buildup of US forces in the Middle East, so traders had adjusted their positions to take that risk into account.
     The conflict has shifted attention, for now, away from issues surrounding artificial intelligence that have dominated markets in recent months.
     On Friday, the S&P 500 fell 0.4 per cent to finish just its second losing month in the last 10. The Dow industrials dropped 1.1 per cent, and the Nasdaq composite fell 0.9 per cent.
     Treasury yields fell in the bond market as investors sought safer places for their money.
     “When markets are fragile, they do not need a knockout blow. They just need another weight on the bar,” Innes said.
     Also hurting the broad market was a report on Friday showing that inflation at the US wholesale level was at 2.9 per cent last month, much higher than the 1.6 per cent that economists expected.
     That could pressure the Federal Reserve to hold off longer on its cuts to interest rates. Lower rates would give the economy and prices for investments a boost, but they risk worsening inflation at the same time.
     In other dealings early Monday, the US dollar rose to 156.34 Japanese yen from 156.27 late Friday. The euro slipped to USD 1.1789 from USD 1.1762. (AP) SKS
SKS

(This story has not been edited by THE WEEK and is auto-generated from PTI)