Markets

Argentina’s markets have tumbled, with the peso currency at a historic low, after a heavy defeat for President Javier Milei’s party at the hands of the Peronist opposition at local elections stoked worries about the government’s ability to implement its economic reform agenda.

On Monday, the peso was last down almost 5 percent against the US dollar at 1,434 per greenback while the benchmark stock index fell 10.5 percent, and an index of Argentine stocks traded on United States exchanges lost more than 15 percent. Some of the country’s international bonds saw their biggest falls since they began trading in 2020 after a $65bn restructuring deal.

The resounding victory for the Peronists signalled a tough battle for Milei in national midterm elections on October 26, when his party is aiming to secure enough seats to avoid overrides to presidential vetoes.

The government now faces the difficult choice of whether to allow the peso to depreciate ahead of next month’s midterms or spend its foreign exchange reserves to intervene in the FX market, according to Pramol Dhawan, head of EM portfolio management at Pimco.

“Opting for intervention would likely prove counterproductive, as it risks derailing the IMF programme and diminishing the country’s prospects for future market access to refinance external debt,” Dhawan said via email, referring to the International Monetary Fund (IMF). “The more resources the government allocates to defending the currency, the fewer will be available to meet obligations to bondholders — thereby increasing the risk of default.”

He said early indications that the government may double down on the current strategy “would be a strategic misstep”.

The 13-point gap in the Buenos Aires Province (PBA) election in favour of the opposition Peronists was much wider than polls anticipated and what the market had priced in. The government setback at the polls adds to recent headwinds for a market that had until recently outperformed its Latin American peers.

“We had our reservations about the market being too complacent regarding the Buenos Aires election results. The foreign exchange market will undoubtedly be under the spotlight, as any instability there can have a ripple effect on Argentine assets,” said Shamaila Khan, head of fixed income for emerging markets and Asia Pacific at UBS, in response to emailed questions.

“However, it’s important to note that simply using reserves to prop up the currency isn’t likely to provide much reassurance to the market,” she added. “The midterm elections, in my opinion, carry more weight and their outcome will significantly influence how Argentine assets perform in the coming months.”

The bond market selloff saw the country’s 2035 issue fall 6.25 cents, on track for its largest daily drop since its post-restructuring issuance in 2020.

Based on official counts, the Peronists won 47.3 percent of the vote across the province, while the candidate of Milei’s party took 33.7 percent, with 99.98 percent of the votes counted.

Argentina – one of the big reform stories across emerging markets since Milei became president in December 2023 – has seen its markets come under heavy pressure over the last month following a corruption scandal involving Milei’s sister and political gatekeeper Karina Milei where she has been accused of accepting bribes for government contracts..

The government defeat also comes after the IMF approved a $20bn programme in April, of which some $15bn has already been disbursed. The IMF has eagerly backed the reform programme of Milei’s government to the point that its director, Kristalina Georgieva, had to clarify remarks earlier this year in which she invited Argentines to stay the course with the reforms.

The IMF did not respond to questions on whether this vote result would change its relationship with the Milei administration or alter the programme.

Market selloff

Argentina’s main equity index has dropped around 20 percent since the government corruption scandal broke, its international government bonds have sold off, and pressure on the recently unpegged peso has forced authorities to start intervening in the FX market.

“The result was much worse than the market expected – Milei took quite a big beating, so now he has to come up with something,” said Viktor Szabo, portfolio manager at Aberdeen Investments.

Morgan Stanley had warned in the run-up to the vote that the international bonds could fall up to 10 points if a Milei drubbing dented his agenda for radical reform. On Monday, the outcome saw the bank pull its ‘like’ stance on the bonds.

Barclays analyst Ivan Stambulsky pointed to comments from Economy Minister Luis Caputo on Sunday that the country’s FX regime won’t change.

“We’re likely to see strong pressure on the FX and declining reserves as the Ministry of Economy intervenes,” Stambulsky said. “If FX sales persist, markets will likely start wondering what will happen if the economic team is forced to let the currency depreciate before the October mid-terms.”

Some analysts, however, predicted other parts of the country were unlikely to vote as strongly against Milei as in Buenos Aires province given it is a traditional Peronist stronghold.

They also expected the Milei government to stick to its programme of fiscal discipline despite economic woes.

“The Province of Buenos Aires midterm election delivered a very negative result for the Milei administration, casting doubt on its ability to deliver a positive outcome in October’s national vote and risking the reform agenda in the second half of the term,” said JPMorgan in a Sunday client note.

“The policy mix adopted in the coming days and weeks to address elevated political risk will be pivotal in shaping medium-term inflation expectations — and, ultimately, the success of the stabilisation programme.”

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September has long carried an unfavourable reputation for global equity markets, and European stocks are no exception.

Historical data reveals that the month consistently delivers weak performances for major continental indices, echoing the negative seasonal pattern seen on Wall Street.

Over the past 30 years, the Euro Stoxx 50 index, Europe’s leading blue-chip benchmark, has posted an average September loss of 1.56%, narrowly trailing August’s 1.59% decline, which ranks as the worst month of the year. In 15 of those 30 years, the index closed the month in the red, underscoring a near-coin toss probability of a negative outcome.

The negative seasonality remains intact even when narrowing the lens to the past decade. Since 2014, the Euro Stoxx 50 has recorded an average 1% drop in September, with six out of ten instances ending in losses.

And it’s not just the Euro Stoxx 50 feeling the September slump. The broader Euro Stoxx 600, which captures a wider slice of the market, has also stumbled during this month, with an average loss of 0.96% since its launch in 2002.

That mirrors the S&P 500’s performance, which has lost about 1% on average during the same month over recent decades, the worst return of any month for US equities.

The September seasonal weakness in equity markets may be linked to a confluence of factors: post-summer rebalancing by institutional investors, renewed macroeconomic uncertainty heading into the year-end, and traditionally lower trading volumes following the holiday period.

National indices not spared

Across Europe’s major country indices, the September effect is equally pronounced.

Germany’s DAX index has delivered an average return of -1.62% in September, second only to August in terms of weakness, with a winning rate of just 47%.

France’s CAC 40 fares similarly, averaging a 1.49% decline in September, its poorest month of the year, although it manages a slightly better 53% winning rate.

Italy’s FTSE MIB index, while averaging a flat 0% return in September over the long term, is currently on a streak of four consecutive negative Septembers.

10 European stocks suffer steepest September setbacks

At the individual stock level, several of Europe’s heavyweight names have demonstrated a persistent pattern of September underperformance, with average losses outpacing their monthly norms and, in many cases, marking September as the worst-performing month of the year.

Infineon (Germany): The semiconductor group has an average September loss of 6.13%, its weakest month historically. The stock has closed lower in four consecutive Septembers, with its worst drop of 52.34% occurring in 2001.

Vivendi (France): With a dismal 33% winning rate in September and an average loss of 4.07%, the French media firm experienced a record monthly drop of 66% in 2021.

Airbus (Netherlands/France): The aerospace giant has fallen in six straight Septembers, averaging a 4.01% decline. Its worst September came in 2001, with shares plunging 37.04%.

LVMH (France): Europe’s largest luxury group averages a 3.42% September drop, despite a marginally better 53% win rate. The worst September loss came in 2001, at -34.71%.

Société Générale (France): The French bank posts an average September return of -3.11%, with a 47% win rate. Its most severe drop was -40.38% in 1998.

Schneider Electric (France): The electrical equipment firm has an average September return of -2.16%, with its steepest fall of 34.43% occurring in 2001.

E.ON (Germany): The utility company averages a 2.18% September loss with a 43% winning rate. Its worst drop came in 2015, at -24.03%.

Deutsche Post AG (Germany): The logistics and courier group averages a 1.97% loss in September. It saw its sharpest monthly decline of -22.41% in 2002.

Kering (France): Another luxury player, Kering averages a 1.76% drop in September with a 43% win rate. The worst September came in 2002 (-23.35%), and the stock is currently on a four-year losing streak.

SAP (Germany): Europe’s largest software company averages a 1.6% September decline. A six-year streak of negative Septembers ended in 2024, though the stock once dropped 40.98% in the month back in 2002.

Published on 26/08/2025 – 12:50 GMT+2
•Updated
12:52

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Struggling Japanese carmaker Nissan Motor Co. saw its shares sink by more than 6% in Tokyo on Tuesday after the company’s second-biggest shareholder, Mercedes-Benz, announced that its pension fund was selling its entire 3.8% stake.

Mercedes’ withdrawal comes as Nissan is implementing a restructuring plan, designed to reduce costs and improve profitability. The Japanese car producer reported a net loss of ¥670.9bn (€3.91bn) for the year that ended in March, and it was followed by a quarterly net loss of ¥115.8bn (€674mn) for the April-June quarter. 

Nissan suspended its financial guidance for the year and announced a restructuring plan, which includes cutting 20,000 jobs and closing factories.

Shareholders haven’t shown much confidence so far in the plans. Nissan stock has lost more than 28% of its value in the year to date, sending the company’s market capitalisation below €7.4bn.

The stocks briefly rose after US President Donald Trump said in July that he would lower tariffs on Japanese car imports to 15%, but the momentum was short-lived.

A spokesperson from Mercedes-Benz said in an email that Nissan shares, that have been held in pension assets since 2016, were “not of strategic importance”.

Nissan’s long-term allies include the French carmaker Renault, which bailed out the Japanese company in 1999 and gained 37% ownership. This was later increased to around 43%, although Nissan has gradually been reducing its holding.

BREAKINGBREAKING,

The US president says Lisa Cook to be removed from position ‘effective immediately’.

United President Donald Trump has ordered the removal of Federal Reserve governor Lisa Cook amid unproven claims of mortgage fraud.

In a letter posted on social media on Monday night, Trump said Cook was being sacked “effective immediately”, in accordance with his powers under the US Constitution and the 1913 Federal Reserve Act.

Citing allegations made last week by the US federal mortgage regulator, Trump said there was “sufficient reason to believe you may have made false statements on one or more mortgage agreements”.

“The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and members banks,” Trump said in the letter, which was shared on his platform Truth Social.

“The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”

Trump had on Friday threatened to fire Cook, who was appointed by former President Joe Biden, if she did not resign.

Trump’s extraordinary move is set to raise further questions about the independence of the US central bank, which has been under intense pressure from Trump to lower interest rates.

In a letter addressed to US Attorney General Pam Bondi and Department of Justice official Ed Martin earlier this month, Federal Housing Finance Agency director Bill Pulte, a staunch Trump ally, alleged that Cook had listed two properties as her primary home addresses.

The Federal Reserve did not immediately respond to Al Jazeera’s request for comment.

More to follow…

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As investors digested the news of a potential rate cut from the United States’ Federal Reserve in the coming months, European markets saw a correction on Monday morning. Benchmark stock indexes dipped into negative territory except for the FTSE 100, which remained closed because of a bank holiday in the UK. 

The Dax in Frankfurt lost 0.4% soon after the opening, the CAC 40 in Paris dipped by 0.6%, the Madrid IBEX 35 was down by more than 0.4% and the European benchmark STOXX 600 decreased by 0.3% after 10.00 CEST. 

At the same time, the euro was slightly down against the US dollar, with the exchange rate at 1.1707.

Turning to market outliers, Danish energy company Orsted shares saw its shares fall to a record low, losing more than 17% of their value in Copenhagen. This came after the US administration halted the company’s offshore wind farm construction project called Revolution Wind on Friday, raising alarm among the company’s investors.

Meanwhile, JDE Peet’s shares soared more than 17% on the news that Keurig Dr Pepper would buy the Dutch coffee company in a €15.7 billion deal.

Asian trade followed US rally

The movements followed a cheerful trading session in Asia, where shares advanced on Monday, tracking Wall Street’s rally after the head of the Federal Reserve hinted that interest rate cuts may be on the way.

Fed chair Jerome Powell said on Friday at an annual conference in Jackson Hole, Wyoming, that he is aware of risks to the labour market — which could prompt faster rate cuts.

A surprisingly weak report on job growth this month has led many traders to expect a cut as soon as the Fed’s next meeting in September, after months of pressure from US President Donald Trump for lower rates.

Hong Kong’s Hang Seng index jumped 1.9% by the close, and the Shanghai Composite index surged 1.5%. The latter is trading at its highest level in a decade, despite worries over higher tariffs on exports to the United States under Trump and weak domestic demand at home.

Tokyo’s Nikkei 225 gained 0.4%, and the Kospi in South Korea climbed 1.3%. 

“Asia is set to rally in catch-up mode, feeding off Wall Street’s Friday rebound after Powell cracked the door open to rate cuts,” Stephen Innes of SPI Asset Management said in a commentary.

In other dealings on Monday morning, US benchmark crude oil gained 0.4% and was traded at $63.92 per barrel at around 11.00 CEST, while Brent crude, the international standard, added 0.25% to $67.39 per barrel.

The US dollar rose to 147.24 Japanese yen from 146.88 yen. 

Gold prices inched lower, by 0.2% to $3,410 an ounce. 

What to look out for this week

Nvidia’s earnings report, due on Wednesday after markets on Wall Street close, is a key focus of attention this week.

The firm’s role as a key supplier of chips for artificial intelligence, along with its heavy weighting, give it outsized influence as a bellwether for the broader market.

In Europe, inflation figures from France, Germany, Italy and other key European countries will be released on Friday.

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Leading European stock markets reflected a cautiously positive sentiment on Friday as investors watched for progress on Ukraine peace talks and awaited a speech from US Federal Reserve chair Jerome Powell. He will speak on Friday at Jackson Hole, where central bankers gather for their annual meeting. 

Markets also digested details of an EU-US trade truce and better-than-expected business activity data, announced on Thursday.

Despite the news that the German economy shrank more than initially estimated in the second quarter, the German DAX changed direction and made up its earlier losses, gaining around 0.1% after 11.00 CEST.

The FTSE 100, though trading in negative territory all morning, also followed suit and changed course, gaining a few points by late morning.

The Paris CAC 40 was up 0.2%, the Madrid IBEX 35 rose by 0.4%, and the European benchmark STOXX 600 increased by 0.2%. 

As for the London blue chip index, the early morning slight dip appeared to be just a small correction. “The FTSE 100 saw a subdued start on Friday after achieving a record close above 9,300 yesterday,” said AJ Bell investment analyst Dan Coatsworth in his note.

Investors are focusing on the message Federal Reserve chair Jerome Powell might deliver at the Jackson Hole summit in Wyoming.

“Investors had been expecting a rate cut from the Fed next month so if Powell were to say anything suggesting rates might be kept on hold, it could see stocks come under greater pressure,” said Coatsworth. He added that robust PMI data from the US on Thursday pointed to a strong economy, potentially reducing the chances of the Fed lowering borrowing costs.

A cut in interest rates would be the first of the year and it would give asset prices and the economy a boost — but it could also risk worsening inflation.

The Fed has been hesitant to cut interest rates this year out of fear that President Donald Trump’s tariffs could push inflation higher, but a surprisingly weak report on employment growth earlier this month suddenly shifted focus towards the job market. Trump, meanwhile, has forcefully pushed for cuts to interest rates, directing fierce criticism towards Powell.

US markets closed in a gloomy mood

On Wall Street on Thursday, the S&P 500 slipped 0.4% to 6,370.17, continuing a gradual decline since a record on 14 August. The Dow Jones Industrial Average dropped 0.3% to 44,875.50, and the Nasdaq composite fell 0.3% to 21,100.31.

In other dealings early on Friday, the US dollar rose to 148.48 Japanese yen, from 148.37 yen. The euro slipped to $1.1590 from $1.1606.

Meanwhile, oil prices fell by midday in Europe; the US benchmark crude lost 0.2% and was traded at $63.38 per barrel. Brent crude, the international standard, also was down by 0.2% at $67.52 per barrel.

Oil prices moved higher yesterday, “as the initial enthusiasm over progress towards a ceasefire between Russia and Ukraine continues to fade”, said ING in a note. Expectations of increased global uncertainty are driven by the difficulties of setting up a Putin-Zelensky summit and securing potential security guarantees for Ukraine.

Asian markets were also mixed on Friday

Asian shares were also mixed on Friday. In Tokyo, the Nikkei 225 rose less than 0.1% to 42,633.29 after Japan’s core inflation rate slowed to 3.1% in July, from 3.3% in June.

ING Economics said in a note that price pressures were broadly in line with market consensus. Inflation staying above 3% raises the likelihood of a rate hike as soon as October, it said.

In Chinese markets, Hong Kong’s Hang Seng index rose 0.9% to 25,339.14. The Shanghai composite index climbed 1.5% to 3,825.76.

South Korea’s Kospi added 0.9% to 3,168.73. Australia’s S&P/ASX 200 fell 0.6% to 8,967.40 as traders sold to lock in gains after the benchmark surged to record highs in recent trading sessions.

Asian stock markets see big gains amid growing expectations of an interest rate cut by the US Federal Reserve.

Japan’s benchmark stock market index has topped its all-time high for a second straight day amid expectations of an interest rate cut in the United States and easing trade tensions between Washington and Beijing.

The Nikkei 225 rose above 43,421 points on Wednesday after better-than-expected US inflation data bolstered the case for a rate cut by the US Federal Reserve at its next committee meeting in September.

The milestone came after the Nikkei on Tuesday breached the 42,999-point mark for the first time.

In the US, the benchmark S&P 500 and tech-heavy Nasdaq Composite also closed at record highs on Tuesday after rising 1.13 percent and 1.39 percent respectively, as investors cheered the latest inflation data release, which showed consumer prices rising a lower-than-expected 2.7 percent in July.

The inflation data added to a positive turn in investor sentiment following US President Donald Trump’s announcement on Monday of a 90-day extension of his pause on crippling tariffs on Chinese goods.

Other Asian stock markets also racked up big gains on Wednesday, with Hong Kong’s Hang Seng Index and South Korea’s KOSPI rising about 2.50 percent and 1 percent, respectively.

The Fed and its chair, Jerome Powell, have for months been under intense pressure from Trump to lower interest rates.

A cut in the benchmark rate would deliver a boost to the US economy, the biggest driver of global growth, by lowering borrowing costs for American households and businesses.

But the Fed has been reluctant to cut the rate due to concerns it could stoke inflation at a time when Trump’s sweeping tariffs are already putting pressure on prices.

“Jerome ‘Too Late’ Powell must NOW lower the rate,” Trump said in a post on Truth Social on Tuesday, claiming that the Fed chair had done “incalculable” damage to the economy by not lowering borrowing costs.

On Tuesday, CME Group’s FedWatch tool raised the likelihood of a September rate cut to 96.4 percent, up from 85.9 percent the previous day.

Published on
08/08/2025 – 14:08 GMT+2

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Binance is partnering with Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) to allow crypto customers to store their funds with the bank instead of keeping them directly on the crypto exchange, according to reporting by the Financial Times.

The move is aimed at rebuilding trust with investors after Binance was hit with a record fine from US regulators nearly two years ago.

Binance is the world’s largest cryptocurrency exchange by trading volume, and it handles billions of dollars in trades each day across hundreds of cryptocurrencies.

What does this mean for crypto?

BBVA, as a bank, will act as an “independent custodian” or a separate and trusted third party and ensure a greater level of safety when it comes to customers’ funds or assets that are traded through Binance.

As the second largest bank in Spain and praised for its innovation and sustainability, BBVA will act as a security guarantee, giving traders a reduced risk while encouraging them to invest in the high-returns crypto exchange.

By storing them with BBVA, if Binance runs into trouble, like being hacked, declaring bankruptcy or facing regulatory action, the funds would still be safe with BBVA.

Banks are much more closely regulated than crypto exchanges, so BBVA’s obligation to follow compliance rules should lead to more interest in crypto overall.

Essentially, the move is akin to putting your valuables in a safe or a secure bank, instead of being displayed in a storefront as they’re being bought and sold.

Binance trying to clean up its reputation

Binance, the world’s largest crypto exchange, got slammed in 2023 with a record $4.3 billion (€3.69bn) fine after US regulators accused it of not keeping checks on its trading floor.

US officials said Binance allowed shady funds to flow through its exchange and allegedly permitted laundered money to be used, helping its big clients dodge the rules.

Founder Changpeng ‘CZ’ Zhao stepped down and served four months in prison for failing to stop money laundering.

Now, with regulators watching its every move, Binance is trying to clean up its act and by partnering with Spain’s BBVA, hopes to prove it can play by the rules.

Published on 08/08/2025 – 11:53 GMT+2
•Updated
11:58

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US gold futures hit a historic high on Friday after the Financial Times reported that the Trump administration had imposed tariffs on imports of one-kilo gold bars.

Futures traded on the Comex, the world’s largest gold futures market, were up 0.9% at $3,484.60 an ounce as of around 11am CEST. This came after the futures hit an all-time high of $3,534.10.

The FT said it had seen a letter from the US Customs Border Protection agency, dated 31 July, which stated that one-kilo and 100-ounce gold bars should be classified under a customs code subject to levies. Investors had previously expected these types of gold bars to be exempt from Trump’s tariffs.

In April, Washington had excluded metals like gold, silver, and platinum from broad US import duties, reducing the price of Comex futures as investors ruled out a supply squeeze.

Before this, traders had been buying cheaper foreign gold and bringing it into the US, capitalising on the price difference between US futures and other benchmarks.

So far this year, gold Comex futures have risen almost 34% as investors adapt to geopolitical uncertainty, viewing gold as a secure place to park their money.

In times of instability, gold is considered a safe-haven asset because its value is less volatile than other investments, even when currencies fall.

“Sustained by factors like its safe haven credentials and a weakening dollar in 2025 – this latest development will have gold bugs eyeing the $4,000 level,” said AJ Bell head of financial analysis Danni Hewson on Friday, referring to the FT report.

“The news is more bad news for Switzerland after being hit by a shock 39% export tariff to the US, given it is one of the biggest precious metal hubs globally,” she added.

Gold is one of Switzerland’s most significant exports to the US, and the country sent around $61.5bn (€52.8bn) of gold to the US over the 12 months ending in June.

The tariff report comes as a fresh blow to Switzerland after the US administration announced a 39% levy on its exports last week.

Switzerland’s President Karin Keller-Sutter and other top officials travelled to Washington on Tuesday to try to lower the tariff rate, among the highest imposed by the Trump administration.

The new rate is over 2.5 times higher than the one on European Union goods exported to the US and nearly four times higher than the one on British exports.

It is also steeper than the 31% rate that Trump proposed for Swiss goods when he announced his so-called “Liberation Day” tariffs in early April.

So far, Switzerland’s powerful pharmaceutical industry, which has promised major investments in the US in recent months amid the tariff worries, is exempt from the 39% rate.

President Donald Trump’s administration has unveiled a range of new tariffs to take effect in one week on most US trading partners.

Nearly 70 countries face Trump’s import duties that were due to come into force on August 1; most were delayed at the last minute and will begin on August 7.

Trump sees the tariffs as an economic tool of power that will put US exporters in a stronger position, by keeping out imports and encouraging domestic manufacturing.

While the situation remains dynamic, different levies will be imposed on countries, ranging from 15 percent on Japan and the European Union to 39 percent on Switzerland.

Here’s how countries and markets have reacted to the news:

China

China has warned that US protectionism “harms the interests of all parties”.

“The Chinese side’s opposition to tariffs has been consistent and clear,” Foreign Ministry spokesman Guo Jiakun said.

“There is no winner in a tariff war or trade war,” he added.

With no permanent deal in place, Beijing and Washington are negotiating a deal over tariffs. A 30 percent combined tariff will, however, be applied, following an agreed pause until August 12. That followed an earlier escalation to a 145 percent tariff on imports.

Taiwan

Taiwanese President William Lai Ching-te has called its 20 percent tariff announced by Trump “temporary … with the possibility of further reductions should an agreement be reached”.

The US president had threatened to hit the island with a 32 percent tax and possible duties on its huge semiconductor shipments.

Japan

A tariff of 15 percent agreed last week between Japan and Washington – down from a threatened 25 percent – is due to be applied from August 7.

“We continue to urge the US to take prompt measures to implement the agreement, including lowering tariffs on automobile and auto parts,” Prime Minister Shigeru Ishiba said on Friday.

The Bank of Japan (BOJ), however, warned that profits of Japanese firms are likely to fall this year because of US tariffs, leading them to downgrade capital expenditure plans.

Automakers have swallowed the rising costs from the tariffs instead of passing them on to US consumers, as seen in a fall of roughly 20 percent in export prices since April, the BOJ said in a full version of its quarterly outlook report.

“This suggests Japanese automakers are averting price hikes that may lead to falling sales volume, at the cost of seeing profitability worsen,” the BOJ added.

Malaysia

Malaysia’s Trade Ministry has said its rate, down from a threatened 25 percent, was a positive outcome without compromising on what it called “red line” items.

Thailand

Thailand’s finance minister said the reduction from 36 to 19 percent in tariffs, would help his country’s struggling economy face global challenges ahead.

“It helps maintain Thailand’s competitiveness on the global stage, boosts investor confidence and opens the door to economic growth, increased income and new opportunities,” Pichai Chunhavajira said.

Cambodia

The US on Friday slashed the tariff rate for Cambodia to 19 percent from earlier levies of 36 percent and 49 percent, a major boost for its crucial garments sector, its biggest economic driver and source of about a million manufacturing jobs.

“If the US maintained 49 percent or 36 percent, that industry would collapse, in my opinion,” Cambodia’s Deputy Prime Minister and top trade negotiator Sun Chanthol told the Reuters news agency in an interview.

European Union

The EU’s trade chief, Maros Sefcovic, said the bloc’s exporters now benefit from a “more competitive position” following a framework agreement between the EU and the US, although he added that “the work continues.

“The new US tariffs reflect the first results of the EU-US deal, especially the 15 percent all-inclusive tariff cap,” Sefcovic wrote in a post on social media platform X.

“This reinforces stability for businesses as well as trust in the transatlantic economy,” he added.

Switzerland

Switzerland expressed “great regret” that it was hit with 39 percent – up from the threatened 31 percent – despite its “very constructive position”.

The levy – more than double the EU’s 15 percent – appeared to catch the rich Alpine nation off guard.

Switzerland ranks sixth in terms of direct investment in the US, with pharma giants Roche and Novartis announcing major spending plans in recent months.

Sri Lanka

Sri Lanka expressed relief that it will face a 20 percent hit – a sharp reduction from the 44 percent originally floated – and expressed hope of a further cut.

“We are happy that our competitiveness in exports to the US has been retained,” Finance Ministry official Harshana Suriyapperuma told reporters.

Bangladesh

Bangladesh negotiated a 20 percent tariff on exports to the US, down from the 37 percent initially proposed by Trump.

Muhammad Yunus, the head of the country’s interim government, called it a “decisive diplomatic victory”.

Pakistan

Pakistan secured a tariff rate of 19 percent with the US on Thursday.

“This deal marks the beginning of a new era of economic collaboration, especially in energy, mines and minerals, IT, cryptocurrency and other sectors,” the Pakistani Finance Ministry said in a statement.

India

Trump on Wednesday said Indian goods would face a 25 percent US tariff starting August 1, slightly below an earlier threatened level.

The country would also face an unspecified “penalty” over New Delhi’s purchases of Russian weapons and energy, Trump said on social media.

In a statement, the Indian government said on Wednesday it was studying the implications of these new tariffs and added New Delhi “attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs”.

South Africa

South Africa will use the weeklong delay in the US’s imposition of 30 percent tariffs to negotiate, to avoid the penalty and save jobs, President Cyril Ramaphosa said on Friday.

“Intensive negotiations are now under way,” Ramaphosa told journalists.

“Our task is to negotiate as strongly and as hard as we can with the United States,” he said. “Our objective, really, is to save jobs.”

Canada

Trump said on Thursday that the US would raise tariffs on certain Canadian goods from 25 percent to 35 percent.

He had warned of trade consequences for Canada after Prime Minister Mark Carney announced plans to recognise a Palestinian state at the United Nations General Assembly in September.

Unlike the new levies hitting dozens of other economies, there is no delay, and these begin on Friday, according to a White House fact sheet.

Carney said his government is “disappointed” by Trump’s decision.

Trump’s order also cited Canada’s failure to “cooperate in curbing the ongoing flood of fentanyl and other illicit drugs” as well as its “retaliation” against his measures.

Carney outlined Ottawa’s efforts to crack down on fentanyl and to increase border security. “Canada accounts for only 1 percent of US fentanyl imports and has been working intensively to further reduce these volumes,” he said.

Products covered by the 2020 United States-Mexico-Canada Agreement – which covers a wide swath of items – will, however, be exempt from the tariff rate.

Markets

European stocks hit a three-week low as investors worried about the effect of the new US levies on dozens of countries.

Asian shares were also headed for the worst week since April after the tariffs were announced.

Oil prices have, however, changed very little, heading for a weekly gain.

Published on
14/07/2025 – 10:22 GMT+2

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Investors in Europe reeled from US President Donald Trump’s tariff threats on Monday morning, sending the major indexes into negative territory.

As of around 9.30am CEST, France’s CAC 40 was down 0.52% at 7,788.23, the UK’s FTSE 100 slipped 0.38% to 8,941.12, and Germany’s DAX dropped 0.85% to 24,049.73.

Spain’s IBEX 35 fell 0.80% to 13,897.80, while Italy’s FTSE MIB dropped 0.86% to 39,726.27.

The STOXX 600 slid 0.48% to 544.73 and the STOXX 50 fell 0.83% to 5,338.57.

The movements come as EU trade ministers are meeting on Monday morning to discuss President Trump’s surprise announcement of 30% tariffs on the European Union. Trump shared the plans on Saturday and said that the same rate, set to kick in on 1 August, would be applied to goods from Mexico.

European officials have been working to secure a deal with the US after the president threatened a 50% tariff on EU exports in May, up from an initially proposed 20% rate. President Trump then retracted the threat of a 50% duty, although retained separate tariffs on exports like steel, aluminium, and cars.

In response to Trump’s announcement over the weekend, the president of the European Commission Ursula von der Leyen said the EU would not impose retaliatory tariffs on US imports before 1 August, allowing time for negotiation.

Denmark’s foreign minister, Lars Løkke Rasmussen, also told reporters ahead of the meeting on Monday: “We shouldn’t impose countermeasures at this stage, but we should prepare to be ready to use all the tools in the toolbox.” 

He added: “So we want a deal, but there’s an old saying: ‘If you want peace, you have to prepare for war.'”

Maroš Šefčovič, the EU’s trade representative in its talks with the US, also said on Monday that negotiations would continue. “I’m absolutely 100% sure that a negotiated solution is much better than the tension which we might have after 1 August.”

He told reporters in Brussels: “I cannot imagine walking away without genuine effort. Having said that, the current uncertainty caused by unjustified tariffs cannot persist indefinitely and therefore we must prepare for all outcomes, including, if necessary, well-considered proportionate countermeasures.”

In light of US isolationism, the EU is also looking to expand trade with alternative partners. Leaders from the bloc will travel to China for a summit later this month, seeking to promote stronger relations despite disagreements over the alleged “dumping” of cheap Chinese goods in Europe. This accusation prompted the EU to impose its own tariffs on Chinese goods last year.

While in China for the summit, EU leaders will also be courting other Pacific nations like South Korea, Japan, Vietnam, Singapore, the Philippines, and Indonesia, whose prime minister visited Brussels over the weekend to sign a new economic partnership with the EU. 

The downbeat investor sentiment in Europe also comes despite pledges to increase defence spending. France’s president Emmanuel Macron on Sunday pledged to raise France’s military spending by €6.5 billion over the next two years. Macron said the 2026 defence budget would be raised by €3.5bn, and another €3bn in 2027.

Published on
09/07/2025 – 10:23 GMT+2

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US copper prices spiked after US President Donald Trump said he planned to place a 50% tariff on imports of the metal on Tuesday.

Copper futures traded in New York jumped around 13% to $5.69 a pound, a record closing-price, dramatically outpacing gains on copper futures traded in London.

As of around 3.30am EDT on Wednesday, the New York price had dropped to around $5.59, although it remained at a much higher level than before Trump’s announcement.

The president commented on the tariff during a televised cabinet meeting, without giving great detail, and Commerce Secretary Howard Lutnick said the administration would formalise the decision in the coming days. Lutnick suggested that the duty would come into effect around the end of this month, or in early August.

The development also comes as Trump is nearing his 1 August deadline, before which he has vowed to slap “so-called” reciprocal duties on countries running a trade surplus with the US.

The president has been sending out letters to trading partners, notifying them of tariff rates, and he said that seven more country-specific rates would be announced on Wednesday. So far, the US has reached trade agreements with the UK, China, and Vietnam.

Copper is used in a wide variety of products, meaning the tariff will affect electronics, construction, and industrial machinery, likely to push up inflation across the board.

This comes as Trump is putting pressure on Federal Reserve Chair Jerome Powell to cut interest rates. Powell said last week that the Fed would have eased monetary policy by now if not for the new US tariffs, which are sowing uncertainty and risking economic stability.

According to the US Geological Survey, the US imported about 810,000 metric tons of refined copper last year, about half of what it consumed. Chile is the most significant exporter to the US, followed by Canada.

A 50% tariff on the metal would bring the rate in line with the duties already placed on aluminium and steel, which became effective in June.

Although the exact rate was undisclosed, the copper duty itself was not unexpected, as Trump in February ordered a Section 232 investigation into imports of the metal. The probe intends to determine whether Trump has the right to impose the tariffs on national-security grounds.

Trump also said on Tuesday that a 200% tariff on pharmaceuticals was coming “very soon”, but he added that he would give the industry at least a year to adjust.

Published on
08/07/2025 – 13:54 GMT+2

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Fast fashion giant Shein has confidentially filed for an initial public offering (IPO) in Hong Kong, the Financial Times reported on Tuesday.

The Chinese-founded, Singapore-based retailer privately filed a draft prospectus last week with Hong Kong’s exchange (HKEX) and sought the blessing of the China Securities Regulatory Commission, according to two people with knowledge of the matter.

The application is a means for Shein to increase pressure on UK regulators as it seeks approval for its London listing. The firm filed to list in the UK capital around 18 months ago, but has since struggled to obtain the green light.

Chinese and UK regulators have notably failed to agree on the language included in the risk disclosure section of its prospectus, particularly where this relates to human rights abuses.

Shein faces claims that it sources cotton from China’s Xinjiang region, where the US and NGOs have accused the Chinese government of forced labour and human rights abuses targeting Uyghur people.The US banned imports from the area in 2021.

In January, Yinan Zhu, a senior lawyer representing Shein, refused to say whether the firm was using cotton from Xinjiang when questioned by UK lawmakers on the Business and Trade committee.

The UK’s Financial Conduct Authority approved a version of Shein’s prospectus earlier this year, but it wasn’t accepted by the China Securities Regulatory Commission.

Hong Kong’s exchange is expected to be more flexible than its UK counterpart when it comes to risk descriptions, although FT sources noted that London would still be the preferred listing location.

Shein had originally sought to list in New York, although changed its plans in response to significant political opposition in the US, linked to its labour practices as well as national security concerns.

Financially, Shein’s IPO would provide a boost to the London market that has seen a number of recent defections. Delisted firms include Just Eat Takeaway, Wise, Ashtead and Flutter Entertainment.

According to data from Dealogic, IPO fundraising in the UK market fell to at least a 30-year low in the first half of this year.

Euronews has reached out to Shein for further comment.

WASHINGTON — President Trump’s decision to hike tariffs once again on some of America’s largest trading partners rattled markets on Monday, dashing hopes on Wall Street that the White House would cut any significant trade deals, as it had promised, by the middle of this week.

In a series of letters sent to foreign leaders, and promptly posted by the president to his social media platform, Trump said the new rates amount to the cost of doing business with “the extraordinary Economy of the United States, The Number One Market in the World, by far.” Under the new policy, Japan, South Korea, Malaysia and Kazakhstan will face 25% import duties starting Aug. 1, while goods from Laos and Myanmar will face a 40% tariff, according to the letters.

South Africa’s president also received a letter, stating goods from the country imported to the United States would face duties of 30%.

Markets recoiled at the news, with the Dow Jones industrial average dropping 1.4%, the Nasdaq falling 1.2% and the Standard & Poor’s 500 sinking 1.2%.

The move essentially returns U.S. tariff rates on those countries to those Trump first announced on April 2, on what he called Liberation Day, but that he ultimately abandoned over widespread Wall Street panic that began spooking the bond market.

Trump hit pause on the crisis by announcing a 90-day suspension of the higher tariff rates, a period set to expire Wednesday. But the White House press secretary, Karoline Leavitt, said Monday that Trump would extend the deadline to the end of the month.

Several senior officials in the Trump administration had promised a slew of trade deals would follow the April episode — “we’re going to run 90 deals in 90 days,” said Peter Navarro, the president’s top trade advisor. Yet the administration has failed to secure a single detailed trade deal, instead announcing three frameworks of understanding with the United Kingdom, China and Vietnam.

“The president is taking a very deliberate approach to correcting this wrong of many decades, of many past presidents — I think he should be commended for the time and the effort that he’s putting into this,” Leavitt told reporters at a press briefing.

“The fact that he has announced a framework with China, a trade deal with the U.K., a trade deal with Vietnam and many others to come in just six months is truly historic, and it’s a testament to this president and his trade team,” she added.

In his letters to foreign leaders, Trump warned that any effort by their governments to retaliate would be met with escalation.

“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge,” he wrote.

Leavitt said more letters would be sent in the coming days. She also stated that additional trade deals could be announced soon. “We are close,” she said.

Scott Bessent, the Treasury secretary, told CNBC in an interview that his inbox was “full last night with a lot of new offers” for trade deals ahead of the now-defunct Wednesday deadline.

“We’ve had a lot of people change their tune in terms of negotiations,” Bessent said. “So it’s going to be a busy couple of days.”

The stock market reaction to Trump’s Liberation Day tariffs, which hiked rates on countries all around the world, was an historic rout, eviscerating trillions of dollars in value, with the Standard & Poor’s index bleeding 12% in just four days.

Markets recovered within weeks, after Trump reversed course, with the S&P hitting a record high on July 3.

Published on
25/06/2025 – 8:08 GMT+2

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Investors kept an eye on the Middle East on Wednesday as a fragile ceasefire between Iran and Israel appeared to hold after initial shakiness.

Both sides claimed victory; Iran’s president said Israel had suffered a “historic punishment”, while Israel’s prime minister argued the offensive had removed “the Iranian nuclear threat”.

A new US intelligence report nonetheless found that Tehran’s nuclear programme had only been set back by a few months by US strikes. Washington denied the findings of the leaked report.

Early in Europe, Brent crude had risen around 1.15% to $67.91 a barrel, while WTI was 1.21% higher at $65.15. The prices suggest the market has still not fully calmed after the conflict in the Middle East, with investors continuing to monitor the shaky ceasefire.

US President Trump rebuked both countries for violating the announced ceasefire on Tuesday. 

“Israel, as soon as we made the deal, they came out and they dropped a load of bombs, the likes of which I’ve never seen before, the biggest load that we’ve seen,” he said.

On his social media platform, Truth Social, he wrote: “Israel, do not drop those bombs. If you do, it is a major violation. Bring your pilots home, now!”

Trump claimed that neither Iran nor Israel “know what the f*** they’re doing”.

Stocks, meanwhile, rose modestly on Wednesday. Dow Jones futures rose 0.06% to 43,452.00, while S&P 500 futures gained 0.05% to 6,149.25.

In Asian trading, the Shanghai Composite index climbed 0.44% to 3,435.60, the Nikkei 225 rose 0.31% to 38,910.93, Hong Kong’s Hang Seng jumped 0.78% to 24,364.79, while South Korea’s Kospi was almost flat, rising 0.01% to 3,104.20.

Australia’s S&P/ASX 200 notched up 0.09% to 8,563.20.

The US Dollar Index was up 0.13% at 97.98 although the currency has still failed to recover from losses seen earlier this year. The euro rose less than 1% against the dollar while the Japanese Yen dropped around 0.12% against its US safe-haven alternative.

“The situation in the Middle East is fluid. While the downside risks have subsided, the situation can change quickly and the balance of risks remains weighted toward higher oil prices,” said Ryan Sweet, Chief US Economist at Oxford Economics, on Tuesday.

Oil prices hit a five-month high over the weekend after the United States struck Iran’s nuclear facilities. Tehran retaliated with an attack on the US Al Udeid Air Base in Qatar, keeping global energy markets on edge.

But oil prices dropped sharply on Tuesday after it appeared that Iran was holding off further attacks for now, including avoiding closing the Strait of Hormuz, a critical chokepoint in global trade.

Brent Crude, the international benchmark for oil prices, has tumbled more than 5.6 percent so far in the trading day and is currently trading at around $66 a barrel.

Strait of Hormuz closure still a concern

One of Iran’s most significant potential retaliatory economic measures would be to shut down the Strait of Hormuz.

The narrow waterway is a key transit route for 20 percent of the world’s oil supply, as well as a broader trade corridor between Europe and Asia.

While Iran’s parliament has backed a proposal to close the strait, the final decision lies with the country’s Supreme National Security Council.

Iran has made similar threats in the past, including in 2018 during US President Donald Trump’s first term, after the US withdrew from the Iran nuclear deal brokered under former President Barack Obama.

A closure could involve laying sea mines across the strait – which at its narrowest point is just 33 kilometres (21 miles) wide – and even attack or capture vessels. As recently as March, the Revolutionary Guard seized ships it accused of smuggling diesel. Similar tactics were used during the Iran-Iraq War in the 1980s.

Shutting the Strait would send a jolt through global markets, though analysts believe there is enough spare capacity to blunt the immediate impact. Still, the risk of further volatility remains high, mirroring the energy market disruptions seen in 2022 following Russia’s invasion of Ukraine.

HSBC analysts say that crude oil prices could top $80 a barrel if the Strait is closed. Goldman Sachs forecasts that it could be $110.

But the strike on the US airbase in Qatar actually calmed global markets because it suggested that economic retaliation is not at the forefront of Tehran’s arsenal.

“If Iran were serious about retaliation, it would sink an oil tanker in the Straits of Hormuz. The fact that it isn’t doing that means it’s bending the knee,” Robin Brooks, senior fellow at the Brookings Institution, said in a post on the social media platform X.

Moment of flux

Outside of the conflict, the oil market was already in a moment of flux. In May, OPEC agreed to increase production by as much as 411,000 barrels per day for the month of July, part of a move to unwind voluntary output cuts after demand crashed during the COVID pandemic.

There are other ways to mitigate the impact of a supply shortage.

Spare production capacity from OPEC+, primarily in Saudi Arabia and the United Arab Emirates, could quickly add about 2.5 million barrels per day to the market, with as much as five million available over the longer term, according to analysis from Third Bridge Capital.

That could buy time if there is a hit on global oil supplies before it ultimately impacts consumers at the gas pump.

Iran produces 4 percent of the global oil supply, most of which goes to China due to existing global sanctions on Iranian oil.

“It’s hard to see in the current environment how Iran would push more barrels into the market since a lot of their supply ends up going to China,” Peter McNally, global head of Sector Analysts and global sector lead at Third Bridge Capital, told Al Jazeera.

China purchases nearly 90 percent of Iran’s oil exports, totalling about 1.6 million barrels per day. China is already grappling with US tariffs and any increase in energy prices will hurt its economy, says Abigail Hall Blanco, professor of economics at the University of Tampa.

“Oil markets are incredibly interconnected. And so if the price of oil globally shoots up as a result of a closure or a restriction of oil tankers passing through the strait, then certainly you would see those impacts on the US and other markets as well,” Hall Blanco told Al Jazeera.

Earlier this morning, Trump said that China can continue to buy Iranian oil.

Meanwhile, regional producers are bracing for a fallout. Iraq’s state-run Basra Oil Company has begun evacuating foreign staff, fearing Iranian retaliation against US forces stationed in the area.

Western firms are also taking precautions. BP, which partners with Iraq’s Basra operation in the massive Rumaila oil field – averaging 3.32 million barrels per day – has reduced its on-site personnel. However, the company says output will not be affected. As of 3pm in New York (19:00 GMT), BP’s stock is down by 1.4 percent.

Outside OPEC+, producers like Brazil, Canada, Guyana and the US could increase output to help fill any supply gap. But with the exception of the US and Canada, the other countries take longer to make those moves, experts said.

“The difference with everyone except the US is just its bit longer lead time. There’s less of an instantaneous response to higher prices. The growth is going to continue. If there is an outage, by way of Iran and the Strait of Hormuz, the quickest [way] to add production is either in Saudi Arabia, the UAE or the US,” McNally said. “But like longer term, the non-OPEC supply will continue to meet most of the demand growth going forward.”

Over the past decade, non-OPEC countries have significantly ramped up production, a trend that’s expected to continue. The Energy Information Administration (EIA) projected in December (PDF) that 90 percent of oil production growth this year will come from non-OPEC sources.

The US also has a strategic petroleum reserve at its disposal that currently holds 402.5 million barrels. The reserve is intended to be tapped into in moments of a dip in production due to global emergencies.

While the US does produce more oil than any other country in the world, at current levels, it will cost $20bn and several years to refill the strategic reserve.

A political risk for Trump

On Monday, Trump on Truth Social said in all-caps, “EVERYONE, KEEP OIL PRICES DOWN, I’M WATCHING.”

Trump campaigned on cutting prices for everyday goods. But his volatile trade policies and tariffs have pushed prices upward. In the most recent consumer price index report, a key metric the central bank uses to measure the rate of inflation, food prices are up 2.9 percent compared to this time last year.

But oil has remained a key strength for the Trump administration, with prices dropping, including a 12 percent decline in gas prices from this time last year.

But that could change very quickly as prices fluctuate.

“It’s just that it’s a fluid situation,” McNally said.

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Israel’s attack on Iranian nuclear and military targets caused the price of oil to surge more than 7% on Friday since Tehran is one of the world’s major producers of oil, despite sanctions by Western countries limiting its sales.

A wider war could slow the flow of Iranian oil to its customers and keep prices of crude and gasoline higher for everyone worldwide. But early Monday, those concerns appeared to abate slightly.

Oil prices were still volatile on the fourth day of the Israeli-Iran crisis, before giving back a bit of their gains. On Monday morning, the US benchmark crude oil was traded at $73.71 per barrel. Brent crude, the international standard, cost $74 per barrel, down from Friday but still 7% higher than the price before the missile fire started. 

Military strikes between Israel and Iran are fuelling concerns that oil exports from the Middle East could be significantly disrupted. However, there is currently no indication that the oil flow is impacted, and concerns are running high.

Meanwhile, major oil companies are being rewarded on the stock market: BP and Shell both gained more than 1% in the Monday morning trade in Europe. 

“Gains in oil majors and defence contractors have helped to push the FTSE 100 onto a positive footing in early trade,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown financial services company.

Shares in the FTSE 100’s top banks were also rising on inflation fears that could result in higher key interest rates. Standard Chartered rose nearly 3%, Barclays and Natwest were up by more than 1% by 11 am CEST. 

Also strengthening the banking sector’s gains in London, Metro Bank shares soared by more than 14% following speculation that investment firm Pollen Street Capital would take over the lender, Sky News first reported over the weekend.

Investors in London also gained confidence after data for May showed a 6.1% year-on-year jump in retail sales in China, the world’s second biggest economy. However, it was coupled with lower-than-expected growth in industrial output, which still rose 5.8% from the previous year.

After 11 am in Europe, Britain’s FTSE 100 inched up 0.3% to 8,876.26. Germany’s DAX gained 0.2% to 23,572.39 and the CAC 40 in Paris edged 0.6% higher to 7,728.66. 

The futures for the S&P 500 and the Dow Jones Industrial Average were up 0.5%.

During Asian trading, Tokyo’s Nikkei 225 added 1.3% to 38,311.33, while the Kospi in Seoul gained 1.8% to 2,946.66.

Hong Kong’s Hang Seng surged 0.7% to 24,060.99 and the Shanghai Composite Index added 0.4% to 3,388.73.

The price of gold has climbed as it remains a safe haven asset. An ounce of gold added 1.4% on Friday, but gave back some of its gains on Monday morning, and was traded at around $3,437 an ounce.

Prices for US Treasury bonds are also on the rise when investors are feeling nervous, but Treasury prices fell Friday, which in turn pushed up their yields, in part because of worries that a spike in oil prices could drive inflation higher.

Inflation in the US has remained relatively tame recently, and it’s near the Federal Reserve’s target of 2%. However, concerns remain high that it could accelerate due to President Donald Trump’s tariffs.

A better-than-expected report Friday on sentiment among US consumers also helped drive yields higher. The preliminary report from the University of Michigan stated that sentiment improved for the first time in six months after Trump put many of his tariffs on pause, while US consumers’ expectations for future inflation eased.

In currency trading early Monday, the US dollar gained to 144.18 Japanese yen from 144.03 yen. The euro rose to $1.1582 from $1.1533.

What is expected for the week?

The Middle East conflict is set to be the focus of the G7 meeting of leaders of wealthy nations in Canada this week.

There are also hopes that Trump will sign more trade deals, which keeps trade optimism a bit higher.

“It’s a big week in terms of decisions on interest rates and the direction of monetary policy,” Streeter said.

“The Federal Reserve is expected to keep rates on hold this week but comments from chair Jerome Powell will be closely watched for future direction of policy.”

Meanwhile, there is a monetary policy meeting of the Bank of England this week, where “policymakers are expected to press pause on rate cuts,” Streeter explained, citing the potential impact of higher energy costs. 

Meanwhile, the UK government’s infrastructure plans are going to be revealed in more detail this week. “The 10-year strategy, worth £725 billion (€850.8 bn), is the backbone of the Starmer administration’s plan to kickstart growth,” Streeter said.

Israel’s strike on military and nuclear sites, and Iran’s retaliation, have rocked already strained global supply chains.

As airlines suspend flights to Tel Aviv, Tehran and other airports across the region, oil companies, shipping firms, and regulatory agencies are scrambling amid growing concerns that key trade routes like the Strait of Hormuz could be caught in the crossfire.

Merchant shipping is still passing through the Strait of Hormuz, but with increased caution. Iran has previously threatened to close this critical trade route in response to Western pressure. Even the suggestion of such a move has already sent shockwaves through global markets, and the price of oil has risen.

United States President Donald Trump’s latest rhetoric has done little to ease those concerns. He warned that if Iran does not “make a deal”, there could be more “death and destruction”.

“If the United States is perceived to be involved in any attacks, the risk of escalation increases significantly,” Jakob Larsen, chief safety and security officer with shipping association BIMCO, told the Reuters news agency.

Oil Prices Rise

As of 4:00pm in New York (20:00 GMT), Brent crude prices, which are considered the international standard, are 5 percent higher than yesterday’s market close.

Oil futures spiked more than 13 percent at one point, reaching their highest levels since January.

Any closure of the Strait of Hormuz, a strategic trade route between the Arabian Gulf and the Gulf of Oman, through which roughly 20 percent of the world’s global oil output travels, would likely drive oil prices even higher. This could intensify inflationary pressures globally, and particularly in the US.

The price surge comes on the heels of a better-than-expected Consumer Price Index report in the US earlier this week, which showed prices increased by just 0.1 percent for the month. Energy costs remain a key inflation driver. Petrol prices, in fact, fell 2.6 percent during the period. Consumer sentiment, too, jumped for the first time in six months as tariff fears eased. However, the new conflict could cut short the relief that US consumers had expressed, according to analysts from JPMorgan Chase.

Wait and see 

“Sustained gains in energy prices could have a dire impact on inflation, reversing the months-long trend of cooling consumer prices in the US,” commodity researchers for JPMorgan Chase said in a note released on the heels of the strike. “We continue to believe that any political policies that might drive oil and inflation higher would likely yield to Trump’s primary objective of maintaining low energy prices—a campaign promise,” analysts Natasha Kaneva, Prateek Kedia, and Lyuba Savinova wrote.

The markets more broadly dropped on the news. The S&P 500 tumbled 1.1 percent, the Dow Jones Industrial Average is down 1.7 and the Nasdaq is 1.3 percent lower.

“Today, as you can see from the markets, whether it’s the S&P, whether it’s Bitcoin, things have been kind of stable or flat. So there’s a little bit of a wait-and-see approach. Oil is acutely affected simply because Iran is such a significant part of the global oil supply. But thus far, Israel has refrained from hitting in any severe fashion the oil infrastructure of Iran. Should that change, that will obviously have a much more dramatic impact,” Taufiq Rahim, an independent geopolitical strategist and Principal for the 2040 Advisory, told Al Jazeera.

If shipping through the critical seaway were suspended, even temporarily, the International Energy Agency said it is well supplied to release emergency reserves, if needed. However, that comes with the risk of depletion.

There are 1.2 billion barrels in its strategic reserves. The world uses about 100 million barrels of oil per day.

“If it does rise to the level of closing the Strait of Hormuz, well, now that’s going to be the biggest oil shock of all time,” Matt Gertken, chief geopolitical strategist and senior vice president at BCA Research, a macroeconomic research firm, told Al Jazeera.

OPEC Secretary-General Haitham al-Ghais criticised the IEA for its statement that it could release strategic reserves, saying it “raises false alarms and projects a sense of market fear through repeating the unnecessary need to potentially use oil emergency stocks”.

This comes amid increased pressure for the group of oil-producing nations to increase output. Earlier this month, OPEC+ members agreed to raise production by 411,000 barrels for the month of July.

The Strait of Hormuz remains open for now. Countries, including Greece and the United Kingdom, have advised ships to avoid the Gulf of Aden, the body of water between Yemen and Somalia that connects to waterways that are close to Israel, and to log all voyages through the Strait, according to documents first seen by Reuters.

Further escalation on the horizon?

Iran could attack Iraq to reduce the global oil supply to further escalate tensions. In January 2024, Iran attacked Iraq, which it said was in retaliation for armed attacks within its own territory, The New York Times reported.

“We should assume that we’re going to lose both Iranian and Iraqi oil production, which brings us to the point where we could be seeing five to seven million barrels per day taken offline,” Gertken told Al Jazeera.

Gertken believes Iran would do this to provoke the West.

“They have to take out some oil supply, but not attack Saudi Arabia or close the Strait of Hormuz because, of course, that would ensure that the US enters the conflict. They need to target some regional production [where] they can have plausible deniability [and blame] some militant group.”