Thanks for joining me. Stocks slumped after Donald Trump was reportedly considering ending the Iran war without a deal on reopening the Strait of Hormuz.
Asian shares fell heavily as the US president’s aides told the Wall Street Journal he was willing to end his campaign in the Middle East even without an agreement on reopening the waterway.
US-produced West Texas Intermediate oil has risen above the psychological $100 a barrel mark in recent days amid the ongoing closure of the strait, where a fifth of the world’s oil and gas exports pass.
Meanwhile prices at the pump in the US have exceeded $4 a gallon, heaping pressure on the Trump administration as the mid-term elections approach later this year.
“This will be hurting the Trump administration,” Will Walker-Arnott of wealth manager Raymond James told BBC Radio 4’s Today programme.
“Markets continue to gyrate. The Trump administration continues to vacillate and so there is continued uncertainty in the markets.”
Macquarie warned last week that an extended Iran conflict could send oil to $200 a barrel later this year, while BlackRock boss Larry Fink said oil at $150 would trigger a global recession.
Brent crude oil, the international benchmark, was little changed at around $113 a barrel on Tuesday.
However, stocks fell heavily in Asia overnight, given the region’s reliance on the Middle East for its energy needs.
South Korea’s benchmark index fell 4.3pc and the Nikkei in Japan dropped by 1.6pc. Here is what you need to know.
5 things to start your day
1) UK facing one of the biggest hits from energy shock, warns IMF | Britain is ‘especially exposed’ to higher oil and gas prices, says the global lender
2) Thousands of flights cancelled as jet fuel costs soar | Aviation analyst warns of ‘a serious shortage less than a week away’ amid rising oil prices
3) Iran strikes push up cost of net zero as aluminium prices rocket | Drone attacks on Middle Eastern smelters threaten to disrupt electric car and solar panel producers
4) European food giant forces through emergency price rise | Princes to charge customers at least 5pc more after Iran war unleashes ‘unprecedented cost pressures’
5) Millions of drivers in line for £830 each from car finance scandal | FCA lets lenders ‘off the hook’ by tightening scheme’s eligibility and reducing overall bill
What happened overnight
Oil steadied and Asian stocks fell after Donald Trump’s aides said the US president was considering bringing an end to the Iran war without a deal on the future of the Strait of Hormuz.
Tokyo’s Nikkei 225 was down 1.2pc to 51,245.50. The war has wiped out all its gains made from the beginning of the year.
South Korea’s Kospi lost 3.4pc to 5,097.11. Hong Kong’s Hang Seng was down 0.5pc to 24,624.55, while the Shanghai Composite index fell 0.4pc to 3,908.28.
Taiwan’s Taiex was trading 2.2pc lower.
With the Iran war in its fifth week, attacks in the Middle East continued and there was still no clear end to the war. Brent crude was trading at around $113 a barrel on Tuesday, while benchmark US crude edged up to $103.
Oil prices have surged in March with Brent crude prices rising more than 40pc since the start of the Iran war.
On Tuesday, a drone hit a Kuwaiti oil tanker in Dubai waters and caused a fire. The US’s Gulf allies were privately making a case to the White House that Iran has not been weakened enough, officials said, and were urging Mr Trump to keep fighting.
Maritime traffic disruptions at the Strait of Hormuz, where roughly a fifth of the world’s oil normally passes through, remains the pain point for global energy supplies. US Secretary of State Marco Rubio said Trump has “options available” in response to Tehran’s threats to control the strait, after Iran was said to have effectively created a “toll booth” there.
Wall Street stocks were mixed on Monday. The S&P 500 dropped 0.4pc to 6,343.72, the Nasdaq Composite lost 0.7pc to 20,794.64, while the Dow Jones Industrial Average added 0.1pc to 45,216.14.
