Photo: Collected
Fresh concern over inflation has arisen after US President Donald Trump rejected a seven-day ceasefire proposal offered by Iran. As a result, both oil prices and bond yields rose on Monday.
However, stock markets showed a mixed trend as they awaited the release of some key US economic data.
News agency AFP reported this.
Iran presented a plan for a seven-day ceasefire at the United Nations General Assembly session last week.
According to the plan, the vital Strait of Hormuz waterway would be reopened if the ceasefire took effect. This could create scope for some reduction in the costs of goods and fuel, which have risen worldwide because of the supply crisis.
This waterway, extremely important for the world’s energy supply, is now one of the focal points of the conflict between the United States and Iran.
Meanwhile, the global shipping situation has become more complicated as the Houthis have taken control of Yemen’s entire Red Sea coast and the vital Bab al-Mandab Strait waterway.
However, while speaking to journalists outside the White House, Trump said clearly, ‘I am rejecting their proposal.’
Even so, in an interview with Axios, he said he hopes talks with Iran will resume.
Trump said, ‘They want to make a deal, but I do not want to make the deal they want to make. A year ago, maybe we would have agreed to such a deal.’
He further said, ‘They have made their position tougher than necessary.’
The Axios report, citing sources concerned, said indirect talks between Washington and Tehran could begin as early as Monday.
However, Iran is still maintaining its conditions for reopening the Strait of Hormuz. These conditions include the release of frozen Iranian assets, the lifting of sanctions on Iranian oil and an end to the US naval blockade.
Oil prices had fallen by more than two percent on Friday after news of Iran’s ceasefire proposal came out. But prices rose again at the very start of the new week.
The price of Brent crude rose above $106 a barrel in the international market.
The rise in oil prices has created fresh concern over inflation and has also had an impact on stock markets.
When the market opened on Monday after a long holiday, the main index of South Korea’s Seoul stock market fell by more than two percent. Similarly, markets in Tokyo, Shanghai, Manila, Bangkok and Jakarta also saw falls.
On the other hand, indices rose on the stock markets of Hong Kong, Sydney, Singapore and Wellington.
Yields have also risen in the world’s bond markets. According to Bloomberg data, the average global bond yield rose above four percent last week, the first time since 2007.
As a result of the rise in the prices of oil and other commodities, the market’s attention is now focused more on the next policy meeting of the Federal Reserve, the central bank of the United States. The meeting is due to be held in late October.
According to CME’s FedWatch tool, the market reckons there is a more than 65 percent chance of interest rates being raised for a second consecutive time.
However, before the decision on interest rates, investors are this week awaiting the Federal Reserve’s preferred inflation gauge and a key employment report. These data may play an important role in policymakers’ decision on setting interest rates.
Stephen Innes of Quintex Intel said, ‘Tensions in the Middle East have risen again after President Donald Trump rejected Iran’s latest proposal on reopening the Strait of Hormuz.’
He said, ‘Oil prices have risen, Asian stock markets have weakened, and the temporary relief seen in global bond markets on Friday now looks like a temporary pause rather than lasting relief.’
However, Innes further said, ‘The market is still holding on to the possibility that everyone may eventually return to the negotiating table.’
