Markets React: Oil Prices Surge Over $1 as Israel Urges Evacuation in Iran’s Capital

BANGKOK (AP) — Stock prices took a hit in Europe and Asia today after Israel issued a warning for 330,000 residents in Tehran to evacuate. U.S. futures also showed declines, signaling unease among investors.

As tensions rise, oil prices increased by over $1 a barrel. The evacuation notice affects a part of Tehran that includes important sites like state television and key hospitals, including one associated with the Revolutionary Guard.

U.S. stock indices reflected this negativity, with futures for both the S&P 500 and the Dow Jones down by 0.6%. On the European front, the DAX in Germany fell by 1.3%, and France’s CAC 40 dropped by 0.9%. The UK’s FTSE 100 was down by 0.5%.

In Asia, however, Japan’s Nikkei 225 index rose by 0.6%. The Bank of Japan decided to keep its interest rate steady at 0.5%, providing some stability amid global uncertainty. They are gradually raising rates to combat inflation but acknowledged a slowdown in economic growth and consumer confidence.

In China, stocks weren’t moving much; the Hang Seng in Hong Kong dipped by 0.3%, while the Shanghai Composite was almost unchanged. South Korea’s Kospi managed a slight gain of 0.1%.

The ongoing conflict between Israel and Iran raises fears of a broader war. If that happens, it could severely limit Iran’s oil exports, causing gasoline prices to rise globally. Historically, oil prices have soared during times of conflict but tend to stabilize after the dust settles.

Recently, crude oil saw a sharp increase of 7% following Israel’s military operations targeting Iranian sites. As of early Tuesday, U.S. crude was up $1.05 to $72.82 per barrel, and Brent crude climbed $1.13 to $74.34 per barrel.

While Wall Street appeared calm on Monday, the S&P 500 rose 0.9%, recovering much of its Friday losses, buoyed by positive movement from U.S. Steel, which gained 5.1% after President Trump signed an executive order supporting investment from Japan’s Nippon Steel.

Gold prices fell after a previous spike as investors began to stabilize their holdings. An ounce dropped by $18.40 to $3,398.70. Investors remain vigilant about other potential issues, particularly the impact of Trump’s tariffs, which could slow U.S. economic growth if not balanced with favorable trade deals.

As the Federal Reserve prepares to meet later this week, most experts predict they will maintain current interest rates. This follows a single cut made late last year as the Fed assesses the fallout from tariffs and inflation trends, which have stayed relatively low, hovering around the 2% target.

In currency markets, the U.S. dollar showed slight gains against the Japanese yen, while the euro saw a minor decline against the dollar.

The market reaction reflects not only immediate geopolitical tensions but also the broader economic sentiment as traders brace for potential policy shifts. With uncertainty swirling, many await clearer guidance from financial leaders regarding future economic forecasts.

For more detailed insights, you can check the latest reports by trusted sources like the U.S. Energy Information Administration and MarketWatch.

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