[U.S. Stock Market] G7 fails to reach consensus on releasing oil reserves; oil prices rise 10%, Dow Jones once dropped nearly 900 points (updating)

The market is awaiting an emergency meeting of G7 finance ministers to discuss a coordinated release of strategic oil reserves led by the International Energy Agency (IEA) to address the surge in oil prices following the Gulf conflict. As of 2022 data, IEA member countries’ emergency oil reserves under OECD government control are estimated to exceed 1.2 billion barrels, mostly crude oil.

According to IEA regulations, all member countries must maintain emergency oil reserves equivalent to at least 90 days of net imports. This government-controlled stockpile must ensure that the country can sustain normal consumption for at least three months.

The Iran conflict has driven oil prices sharply higher, with Brent crude rising nearly 30%, approaching $120 per barrel at one point. The gains have since narrowed, with the latest increase around 10%, hovering near $100.

The three major U.S. stock indices declined, with the Dow dropping 886 points to 46,615, the S&P 500 down 1.5% to 6,638, and the Nasdaq falling 1.4% to 22,084.

The U.S. dollar index rose 0.5%, temporarily breaking above 99 to 99.35. Market concerns over rising oil prices fueling inflation have decreased expectations for rate cuts by the Federal Reserve. The yield on the 10-year U.S. Treasury continues to rise, currently at 4.175%. Gold prices remain under pressure from inflation fears, down 2%, at around $5,071.

Technology stocks weakened, with Tesla (US: TSLA) falling nearly 4%, Amazon (US: AMZN) and Meta (US: META) both dropping over 2%.

Additionally, U.S. markets have entered daylight saving time, opening one hour earlier at 9:30 p.m. Hong Kong time.

Credit Suisse notes that the oil market has entered a panic state, with prices fluctuating into triple digits, mainly driven by market sentiment, as the conflict itself has not seen any substantial changes. So far, supply disruptions are primarily due to cautious ships avoiding the Strait of Hormuz, causing trade disruptions rather than military blockades. However, it is expected that in the coming week and beyond, Middle Eastern oil supply could face shutdowns of up to 75%.

The bank states it will continue to monitor the situation closely. Currently, there is no significant damage to energy infrastructure, and Iran’s military strength appears to be waning. Solutions ensuring the safe passage of trade through the Strait of Hormuz remain feasible. Given the fog of war, they reaffirm a neutral stance on oil and natural gas, maintaining the basic expectation that energy prices will peak at current or slightly higher levels.

Hong Kong stocks and ADR markets are continuously updating. See the next page for details.

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Market Trends:

[18:20] Dow futures down 492 points, Nasdaq futures down 1.1%. Oil prices surge over 10%, breaking $100. Markets open one hour earlier due to daylight saving time.

[12:07] Dow futures down 1,006 points, at 46,511; S&P 500 futures down 130 points, at 6,613; Nasdaq futures down 542 points, or 2.2%, at 24,127.

[12:07] [Iran Crisis] Iran conflict impacts financial markets. Senior strategist Yardeni: The probability of a market crash in the U.S. stock market by the end of the year has increased to 35%.

[11:15] [700] Tencent reportedly plans to acquire Warner Bros. from Paramount, exploring a multi-billion dollar deal.

[10:33] [Iran Crisis] Oil prices break $100, with NYMEX crude soaring 30%. Major Middle Eastern oil producers cut output.

[10:20] [Iran Crisis] Oil prices surge, dragging down Asia-Pacific stocks. “Black Monday” in Japan and South Korea, both down over 7%. South Korea reportedly considers implementing oil price caps.

[09:56] [Iran Crisis] JPMorgan forecasts Middle Eastern oil capacity may decrease by 4 million barrels per day by next weekend.

[09:50] [Iran Crisis] Schroders’ Alex Tedder: Oil may reach $100. “I don’t plan to reduce holdings in energy stocks over the next two or three years.”

[08:17] [Iran Crisis] Gold drops over 2%, testing $5,000, as oil prices spike, heightening inflation concerns.

[07:30] [Iran Crisis] Black Monday begins, with oil prices rising 20%, surpassing $111. Trump: Small price to pay. Dow futures plunge 1,112 points (updating constantly).

[07:30] [Global Outlook] Focus on Middle East conflict and U.S. inflation data. Markets open one hour earlier for daylight saving time.

[07:30] Concerns over oil supply disruptions and worse-than-expected U.S. employment data caused a major sell-off last Friday. The Dow once fell 945 points to 47,009; the VIX volatility index surged 21.6% to 28.88. The Dow closed down 453 points, the S&P 500 fell 1.33%, and the Nasdaq declined 1.59%.

See the market close updates:

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