Stock indexes around the world tumbled and government bonds rose with the dollar on Tuesday as a widening conflict in the Middle East pushed oil prices up sharply for a second straight day and exacerbated investor concerns about inflation.
US crude oil prices jumped more than 7 per cent along with Brent as the war, started over the weekend, intensified with Israel attacking Lebanon, and Iran responding with strikes against energy infrastructure in Gulf countries and tankers in the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas typically passes.
Wall Street indexes were down nearly 2 per cent, following European stocks’ more than 3 per cent loss after MSCI’s Asia Pacific index closed down 3.5 per cent.
Dublin
Dublin’s Iseq fell by 2.6 per cent amid a euro-wide market slump. The falls were almost across the board. AIB, Bank of Ireland and Ryanair led the slide, falling 2.2 per cent, 2.9 per cent and 2 per cent respectively.
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Ahead of group results on Wednesday home builder Cairn fell by 3.4 per cent while rival Glenveagh was down 0.7 per cent. Kilkenny-based food group Glanbia also slid by 1.2 per cent to €17.01 while shares in Kerry Group were down more than 3 per cent at €71.05. FBD Holdings was one of a few listed group to register a positive performance, rising 0.9 per cent.
Europe
European stocks headed for the biggest two-day drop since April as conflict in the Middle East intensified, casting doubt over the inflation and monetary policy outlook.
The retreat was broad, with all industries posting declines. The blue-chip Euro Stoxx 50 index fell 3.8 per cent, while the German Dax retreated 4 per cent.
Euro-area inflation unexpectedly quickened, backing the European Central Bank’s caution on interest rates, particularly as the war in Iran sends energy prices surging.
Elsewhere, Zurich Insurance Group fell 7.3 per cent after starting a $5 billion capital raise to finance bid for insurer Beazley.
In earnings news, Beiersdorf dropped 19 per cent after the German owner of the Nivea brand posted disappointing guidance for the year. VAT Group shares retreated 3.6 per cent after the chip-equipment maker’s first-quarter sales guidance missed estimates.
London
Britain’s main stock indexes logged their biggest daily drop in almost a year on Tuesday, as investors dialled down their expectations for interest rate cuts as a jump in energy prices rekindled worries about a resurgence in inflation.
Brent crude gained nearly 7 per cent, while European gas prices soared 15 per cent after the US-Israeli war on Iran halted energy exports from the Middle East.
The sell-off in British stocks was broad-based, with shares of banks, miners, housebuilders and travel companies coming under pressure.
The blue-chip FTSE 100 index dropped 2.8 per cent and the midcap FTSE 250 index fell 3.1 per cent, recording their steepest one-day falls in nearly a year.
Among stock movers, Smith & Nephew gained 3.6 per cent after Barclays raised its price target on the medical products maker.
Aer Lingus owner IAG dropped 5.4 per cent, tracking a wider decline in carriers as fuel prices jumped and Middle East travel disruptions persisted for a fourth day.
New York
Wall Street’s main indexes also fell on Tuesday, with the S&P 500 hitting its lowest in over two months, as investors braced for the impact of a widening Middle East conflict on oil prices, inflation and global trade.
Tehran’s threat to attack any vessel attempting to transit the Strait of Hormuz, combined with production halts by several Middle Eastern oil and gas producers, has driven up global shipping rates and prices of crude and natural gas.
The strait, a critical chokepoint, carries roughly one-fifth of the world’s total oil consumption.
Technology stocks fell 1.5 per cent, with Nvidia slipping 1.7 per cent, after gaining in the previous session.
The small-caps index slid 2.6 per cent, while Wall Street’s fear gauge, the CBOE volatility index, spiked to a fresh three-month high of 27.30 points.
Paramount Skydance fell 7 per cent after Fitch Ratings downgraded the company’s rating to junk following its recent proposed acquisition of Warner Bros Discovery. – Additional reporting: Reuters
