Stock Market Nasdaq Opens Amid Global Market Turmoil
Global markets fell as the conflict in the Middle East sent oil and gas prices higher. US stocks dropped after trading opened, then pared some losses; the Dow…
Global market turmoil hit US stocks after trading opened on Tuesday, with the Nasdaq falling alongside the Dow and S&P as the Middle East conflict drove oil and gas prices higher. The sell-off reached London and Asian markets, while investors reassessed the prospects for interest rate cuts.
The Dow fell more than 2% before paring losses. By Tuesday’s close, it was down 400 points, or 0.8%, while the S&P and Nasdaq recorded similar declines, according to the Guardian.
Energy prices are adding pressure. Brent crude rose a further 6% to nearly $83 a barrel, while the month-ahead UK gas price climbed 30% to 148p a therm.
Energy costs weigh on markets and rate expectations
The gas increase followed a 44% surge on Monday, taking prices to almost double their levels last week and a three-year high. Higher energy costs could feed inflation and complicate efforts to lower interest rates.
In London, the FTSE 100 closed 2.75% lower, its biggest one-day fall since the tariff shock described by the Guardian as Donald Trump’s “liberation day” 11 months ago. Almost all listed stocks fell.
Asian markets also dropped. Japan’s Nikkei was down 3.1%, while South Korea’s Kospi fell 7.2%.
The market moves followed the US-Israel attack on Iran and the expansion of the conflict across the region. Israel launched fresh attacks on Tehran and Beirut on Tuesday, the report said.
The financial impact extends beyond share prices. The pound fell about 0.8% against the US dollar, or about one cent, to $1.33, its lowest level against the dollar in almost three months. Bitcoin dropped 2.3%, while gold fell nearly 5% to $5,072 an ounce after rising on Monday as investors sought safer assets.
UK government borrowing costs also rose on Tuesday morning. Yields on two-year, 10-year and 30-year bonds each surged by around 10 basis points. Money markets put the chance of a Bank of England rate cut at its next meeting, on 19 March, at 29%, down from 80% last week.
That shift matters to borrowers hoping for lower rates. The Guardian reported that soaring energy prices could also undermine Rachel Reeves’s plan to curb inflation and revive sluggish UK economic growth. UK inflation fell to 3% in January from 3.4% in December, but rising oil and gas prices are expected to push it higher.
“Stubbornly high oil and gas prices could impact economies around the world. Specifically, they could be inflationary and disrupt plans to cut interest rates,” said Jemma Slingo, a pensions and investment expert at Fidelity International.
Investors reassess rate cuts
Expectations for US rate cuts have shifted too. At the end of last week, swaps markets priced in 61 basis points of cuts by the US central bank. That figure has since fallen below 50 points, implying fewer than two quarter-point cuts from the Federal Reserve this year.
The International Monetary Fund said the crisis was adding to an “already uncertain” global environment through disruptions to trade and economic activity, energy-price surges and volatility in financial markets. It said the ultimate impact would depend on the extent and duration of the conflict.
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, said the UK remained exposed to another energy shock. “Nobody knows exactly how the next few weeks will play out, but with homes and businesses still facing the debt and after-effects of the last gas crisis, people will understandably be concerned.”
Source: theguardian.com
