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Global Shares Mostly Lower Tuesday 03/03 04:46
Global shares mostly declined and oil prices surged Tuesday as investors
eyed threats to world energy supplies from the Iran war.
TOKYO (AP) -- Global shares mostly declined and oil prices surged Tuesday as
investors eyed threats to world energy supplies from the Iran war.
U.S. futures also declined, with the contract for the S&P 500 down 1.5%
while that for the Dow Jones Industrial Average fell 1.6%.
In early European trading, France's CAC 40 dropped 2.2% to 8,207.10, while
in Germany the DAX sank 2.9% to 23,935.62. Britain's FTSE 100 declined 2.2% to
10,546.30.
In South Korea, a big energy importer, the Kospi plunged 7.2% as markets
reopened after a holiday on Monday, closing at 5,791.91.
Benchmark U.S. crude rose $3.24 to $74.47 a barrel. Brent crude, the
international standard, added $3.56 to $81.30 a barrel. Oil prices jumped
Monday over worries that the war could clog the global flow of crude.
Japan's benchmark Nikkei 225 sank 3.1% to finish at 56,279.05. Like other
resource-poor countries in the region, Japan could be especially hit by the
lack of access to the Strait of Hormuz, since much of its oil and natural gas
imports are shipped through there.
Analysts say Japan has a sizable stockpile lasting more than 200 days, and
so the threat isn't immediate.
Japanese energy stocks plunged, with Eneos Corp. down 3.4% and Idemitsu
Kosan down 3.1%. Defense-related issues, which have risen recently on
expectations of more military spending by Prime Minister Sanae Takaichi, sank
back as traders sold to lock in gains from the day before. Mitsubishi Heavy
plunged 5.3%, and IHI lost 4.9%.
In the rest of the region, Australia's S&P/ASX 200 lost 1.3% to 9,077.30,
while Hong Kong's Hang Seng shed 1.1% to 25,768.08. The Shanghai Composite
index lost 1.4% to 4,122.68.
Stocks of airlines, including American Airlines, United and Delta, were some
of Monday's biggest losers on Wall Street. Higher oil prices threaten their
already big fuel bills, while the fighting in the Middle East also has closed
airports and left travelers stranded.
The losses cascaded in Asia, with ANA stock down 3.3%, while Japan Airlines
fell 6.4%. Korean Air declined 10.3% and Qantas Airways lost 1.8%.
Despite the retreats in many markets, the reactions to the war have been
moderated by the fact that past military conflicts in the Middle East haven't
caused long-term declines. For this war to knock down U.S. stocks in a
significant and sustained way, the price of oil would perhaps need to jump
above $100 per barrel, according to strategists at Morgan Stanley led by
Michael Wilson.
"Since 2000, there have been 22 one-day oil price spikes of more than 10%,"
said Stephen Innes, managing partner at SPI Asset Management. "In other words,
energy shocks do not automatically derail equities unless they are severe and
sustained. The market is well aware of that playbook."
On Monday, the S&P 500 fell as much as 1.2% but finished with a gain of less
than 0.1%. The Dow Jones Industrial Average dipped 0.1% and the Nasdaq
composite rose 0.4%. Both also recovered from steep early losses.
In currency trading early Tuesday, the U.S. dollar edged up to 157.53
Japanese yen from 157.47 yen. The euro cost $1.1627, down from $1.1692.
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