Middle East Heats Up, Oil Takes Off!
Oil prices rose while shares in Asia were set to follow Wall Street lower as concerns mounted that escalating tensions in the Middle East could trigger more direct U.S. involvement.
West Texas Intermediate crude rose as much as 1.1% in early trading after hitting its highest in nearly five months on Tuesday. U.S. equity futures were lower, with contracts for Sydney, Tokyo and Hong Kong all dropping after the S&P 500 dropped 0.8%. Weak economic data reinforced U.S. losses and lifted bonds ahead of the Federal Reserve’s interest rate decision.
The dollar rose the most in a month on Tuesday. Aside from geopolitical risks, Treasuries rose as tepid reports on retail sales, housing and industrial production bolstered bets that the Fed will cut interest rates at least one more time in 2025 if energy prices do not pose a threat to its disinflationary path.
President Donald Trump met with his national security team to discuss the escalating Middle East conflict, according to people familiar with the matter, fueling fresh speculation that the U.S. will join an Israeli strike on Iran.
"For now, the markets will remain mostly nervous until they turn down the heat in the region," said Kenny Polcari at SlateStone Wealth.
Trump posted a demand for Iran's "UNCONDITIONAL SURRENDER" and warned of a possible attack on the country's leader, Ayatollah Ali Khamenei. "We know exactly where the so-called 'Supreme Leader' is hiding. He's an easy target, but safe there - We won't be taking him out (killing him!), at least not yet," Trump said on social media.
Source: Bloomberg
