Stock markets fell and oil prices rose on Tuesday (16/4) amid growing fears of a wider war in the Middle East, after Israel’s military chief promised a response to Iran’s attack on his country at the weekend.
The sell-off came after Wall Street’s three main indexes plunged in response to worse-than-expected US retail sales data. This strengthens the view that the world’s leading economy is still in poor condition and further weakens hopes of an interest rate cut this year.
Traders also digested figures showing China’s expansion easily beat expectations in the first three months of the year. However, well-subpar retail and industrial data suggests that China’s leaders have a lot of work to do to drive growth.
All eyes are on the Middle East after Tehran fired hundreds of missiles and drones at regional foe Israel in retaliation for the April 1 attack on the consular building of its embassy in Damascus that killed seven Iranian Revolutionary Guards.
Although air defense systems destroyed most of the attacks and Iran said “the matter can be considered closed”, Israeli military chief General Herzi Halevi issued a warning, fueling fears of a dangerous escalation.
Warren Patterson, at ING Groep, said the potential for an Israeli retaliation meant this situation of uncertainty and tension would last for quite some time. “The greater the escalation we see, the more likely we are to see oil supplies from the region impacted.”
Oil prices rose in Asian trade, after slipping on Monday on hopes of de-escalation following a US call on Israeli Prime Minister Benjamin Netanyahu not to launch a counterattack.
West Texas Intermediate, for example, rose 0.1% to US$85.46 per barrel. Meanwhile, Brent North Sea Crude jumped 0.4% to US$90.44 per barrel. (AFP/M-3)
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