Key Takeaways
- Crude oil prices surged (Brent over $105/bbl) following President Trump's signals of further military strikes on Iran, sparking supply disruption fears.
- The U.S. Embassy in Baghdad issued an urgent warning for Americans to depart Iraq within 48 hours amid threats of Iran-backed militia attacks.
- India’s Manufacturing PMI for March slowed to 53.9, down from 56.9, though it narrowly exceeded analyst estimates of 53.8.
- Berenberg upgraded BHP (BHP) to Hold while raising the price target for Glencore (GLEN) to 630p.
- Global bond markets saw yields climb, with the Japanese 5-year JGB yield rising 6 bps to 1.790%.
Middle East Escalation Drives Energy Surge
Oil prices jumped significantly in early Thursday trading as President Trump signaled the potential for further military strikes against Iran. According to reports from the Wall Street Journal, the administration's aggressive stance has revived deep-seated concerns regarding supply stability in the Middle East, particularly concerning the Strait of Hormuz.
In a related development, the U.S. Embassy in Baghdad issued a critical security alert, warning of potential attacks by Iran-backed militias. The embassy urged all American citizens to depart Iraq within the next two days, citing an "acute risk" of missile and drone activity in the region.
Global Equities and Bonds Under Pressure
The escalating geopolitical risk weighed heavily on Asian equities, which saw broad declines as investors pivoted toward safe-haven assets. Market sentiment shifted rapidly as traders priced in the possibility of a prolonged conflict, leading to a 1.4% drop in Japan's Nikkei 225 and a 2.6% slide in South Korea's Kospi.
Fixed income markets also experienced volatility, with sovereign bond yields trending higher. The 5-year Japanese government bond (JGB) yield climbed 6 basis points to reach 1.790%, while European benchmarks saw prices fall, with German Bunds declining 0.37% and French OATs dropping 0.55%.
India Manufacturing Growth Softens
Economic data from India showed a cooling in the manufacturing sector, with the S&P Global Manufacturing PMI falling to 53.9 in March. While this figure was slightly above the consensus estimate of 53.8, it represents a notable deceleration from the 56.9 recorded in February.
Analysts noted that while the sector remains in expansionary territory, the slowdown reflects broader global uncertainty and rising input costs. Manufacturers are reportedly facing the steepest cost pressures since late 2022, primarily driven by higher fuel and raw material prices linked to the Middle East conflict.
Berenberg Adjusts Outlook on Mining Giants
In the commodities sector, Berenberg analysts issued a series of updates for major mining firms. The firm lifted its price target for Glencore (GLEN) to 630p, maintaining a bullish outlook on the natural resources company as it approaches its next fiscal results.
Conversely, Berenberg upgraded BHP (BHP) to Hold from Sell, citing a more balanced risk-reward profile at current valuations. However, the brokerage simultaneously reduced its price target for the mining giant to 2500p, reflecting caution over heavy capital expenditure on major projects like the Jansen potash mine.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.