Dip into Asia and stocks as the world waits for Iran’s response

Wayne Cole

SYDNEY (Reuters) – Wall StreetShare Futures slipped Monday, with oil prices temporarily struggling with five-month highs. Investors took risks to global activity and inflation as they waited in fear that Iran would retaliate against an attack on US nuclear sites.

Early movements were contained, and the dollar was getting only small safe bids, with no signs of panic sales across the market. Oil prices had risen by about 2%, but the initial peak was already plentiful.

Optimists either hoped Iran had come to have its nuclear ambitions cut, or even a change of government could allow a hostile government to take power there.

However, JPMorgan analysts warned that past episodes of government change in the region typically saw oil prices rise up by up to 76%, and on average 30% over time.

The key is to access it from the Strait of Hormuz. The Strait of Hormuz is the narrowest point, about 33 km (21 miles) wide, and is about 20% of the world’s daily oil consumption.

“As the US has become involved, the risk of Iran retaliation by disrupting the oil flow from the Middle East has increased significantly,” an analyst at ANZ warned. “Prices in the $90-95/bbl range can result.”

For now, Brent was at a relatively restrained 1.9% at $78.46 per barrel, while US crude rose 2% to $75.30. Elsewhere in the commodity market, gold rose 0.2% to $3,375 per ounce. (gol/)

The stock market has been resilient so far, with S&P 500 futures down 0.3% and Nasdaq futures down 0.5%, both starting with losses of nearly 1%.

Nikkei futures were just a fraction of the time at 38,380, pointing to a small opening fall in the cash index.

The dollar rose 0.2% in the Japanese yen to 146.36 yen, while the euro fell 0.3% to 1.1485. The dollar index has been confirmed from 0.25% to 99.008.

There were also no signs of a rush to the traditional safety of the Ministry of Finance.

Federal Reserve futures have low ticks and are likely to reflect an increase in oil prices at the time tariffs are felt at US prices.

The market is still priced a small opportunity for the Fed to cut at the next meeting on July 30, even after Fed Christopher Waller broke the ranks and insisted on easing in July.

Most other Fed members, including Chairman Jerome Powell, are more cautious than leading the market to guide policies to wager a cut in September.

Powell faces two-day questions from lawmakers as at least 15 Fed officials are speaking this week.