Stock market falls resume as US-Israel war with Iran drives up oil and gas prices | US-Israel war on Iran
Market selling resumed on both sides of the Atlantic on Thursday as fears grew that there would be no quick solution to the conflict in the Middle East.
Initial gains in European markets following a recovery in Asia were erased in later trading, and Wall Street was also trading sharply lower in early afternoon trading in New York.
The US-Israeli war with Iran has increased oil and gas prices, triggered fears of a new inflation shock and weakened hopes for a rate cut.
London’s FSTE 100 closed down 1.5%, or 154 points, at 10,414 points, while Germany’s DAX and Italy’s FTSE MIB closed down 1.6%. France’s CAC closed with a loss of 1.5% and Spain’s IBEX closed with a loss of 1.4%.
In the US, the Dow Jones lost around 2%, the S&P 500 lost around 1.3% and the Nasdaq lost around 1%.
Meanwhile, oil prices continued to rise, with Brent crude rising 4% to nearly $85 a barrel on Thursday. Gas prices in Europe increased by more than 3 percent. Brent crude oil has increased by 15% in the last five days.
“The optimism that helped lift Asian and European markets earlier in the day has evaporated like droplets of water on a smoldering stove,” said Danni Hewson, head of financial analysis at AJ Bell. “A quick solution to the conflict in the Middle East is becoming harder to find, forcing markets to relook at interest rate expectations for the coming months.”
In the UK, the more domestically focused FTSE 250 lost 0.9% to close at 22,700.20. Among the biggest losses was Wizz Air, which canceled flights to and from Israel, Dubai, Abu Dhabi and Amman until March 15. The airline has warned of a €50m (£43m) hit to annual profits, driven by higher jet fuel costs. Its shares fell 11.3 percent.
FTSE 100 airlines were also affected; easyJet shares fell 5% on Thursday, while British Airways owner IAG fell 2%.
U.S. Treasury yields were on track to rise for a fourth consecutive day as higher oil prices began to cast doubt on the Federal Reserve’s emergency rate cut.
Markets are likely to improve if tankers start passing through the Strait of Hormuz, which has been closed by Iran since the weekend. About one-fifth of global oil and liquefied natural gas supplies passes through the Bosphorus, located off the southern coast of Iran.
