Global stocks opened cautiously on Tuesday as elevated oil prices reflected growing concerns over the escalating conflict in the Middle East, all while anticipation builds for China’s reopening following a lengthy holiday.
The benchmark 10-year U.S. Treasury yield remained above 4% during early trading in Asia, driven by a strong U.S. labor market that has led traders to significantly reduce expectations for Federal Reserve rate cuts.
Tensions heightened as Hezbollah launched rockets at Israel’s third-largest city, Haifa, with Israel considering an expansion of its military actions into Lebanon. This comes one year after the devastating Hamas attack that initiated the Gaza war.
Fears of a broader conflict and potential supply disruptions pushed Brent crude futures above $80 a barrel for the first time in over a month, reaching $81.00 per barrel—a 0.09% increase. Meanwhile, U.S. crude futures rose 0.14% to $77.25 per barrel.
Analysts at ANZ noted, “The global benchmark reached USD80/bbl as expectations rise that Israel may target Iran’s oil infrastructure in response to a recent missile attack. President Biden’s comments have not alleviated these concerns.” They also emphasized, “We still believe a direct attack on Iran’s oil facilities is the least likely retaliation option for Israel.” Despite these developments, the overall market sentiment remained tense on Tuesday.