World shares trade mixed after Middle East conflict reignites

Bangkok: Shares were mixed in Europe and Asia and US futures declined Monday on expectations that the US Federal Reserve may raise interest rates soon.

In early European trading, Germany’s DAX lost 0.9 per cent to 26,339.04, while the CAC 40 in Paris edged 0.1 per cent lower, to 8,390.43. Markets in Britain were closed for a bank holiday. The futures for the S&P 500 and the Dow Jones Industrial Average were 0.2 per cent lower.

Oil prices surged more than 3 per cent after US forces struck Iranian rocket launchers on the Strait of Hormuz, marking their first military action in a month. The Trump administration just days earlier had shifted its focus to economic pressure, and a return to open conflict would be dangerous for the region. Brent crude, the international standard, jumped 3.8 per cent to $91.40 per barrel early Monday.

US benchmark crude oil was trading 3.8 per cent higher at $86.58 per barrel. “The Middle East had finally gone quiet enough for oil traders to start sanding some of the war premium out of crude. Then Sunday arrived, with a reminder that quiet in the Strait of Hormuz is not the same as peace,” Stephen Innes of SPI Asset Management said in a commentary.

Markets in Asia fell following a speech Friday by Fed Chairman Kevin Warsh that reinforced expectations the US central bank will do what is needed, such as raising rates, to bring inflation down despite possible short-term pain for the economy.

In Tokyo, the Nikkei 225 lost 0.1 per cent to 66,311.93, while the Kospi in South Korea reversed earlier losses, gaining 0.5 per cent to 6,820.02. Hong Kong’s Hang Seng lost 0.1 per cent to 25,566.99 and the Shanghai Composite index gained 0.9 per cent to 3,986.30.