Oil Above $100 Weighs on Asia Stocks Amid Extended Hormuz Closure Fears

GLOBAL MOOD: Extreme Risk-Off
Drivers: Khamenei vows Hormuz shut, Brent breaks $100, private credit stress spreads

Asian equity markets opened lower on Friday, reflecting a strong risk-off mood as oil prices surged past $100 a barrel and geopolitical tensions intensified in the Middle East. Investor concerns deepened after Iran’s new Supreme Leader Mojtaba Khamenei signalled the Strait of Hormuz would remain shut, threatening a critical global energy supply route. Brent crude climbed over 9% to above $100, heightening fears of a prolonged energy shock, rising inflation and slower global growth, prompting investors to retreat from risk assets across the region.

THE BIG STORY
Iran's new Supreme Leader Mojtaba Khamenei made his first public statement on Thursday, vowing to keep fighting and maintain the Strait of Hormuz closure as leverage against the US and Israel. Hours later, Israeli Prime Minister Netanyahu issued a barely veiled threat to kill Khamenei at his first press conference since the war began, saying he "wouldn't issue life insurance policies on any of the leaders of the terrorist organization" while declining to elaborate on Israel's plans. The exchange between the two leaders signals that both sides are digging in for a prolonged conflict, with the Hormuz closure now official Iranian state policy and Israel signalling it views leadership decapitation as a legitimate military objective.

Cuba's Foreign Minister urgently contacted China and Russia following Trump's remarks about a potential "friendly takeover" of the island. Russia reiterated its support for Cuban sovereignty, highlighting increased tensions among the US, Russia, and China.

Fed Vice Chair Michelle Bowman announced that big bank capital requirements would fall slightly under revised Basel rules, a significant Wall Street victory after years of lobbying against post-2008 crisis regulations. The Fed will vote on the proposal at next week's board meeting. Meanwhile, Trump publicly demanded Powell cut rates "IMMEDIATELY" on Truth Social as oil surged past $100, a demand markets are largely ignoring, with investors now pricing the Fed on hold until year-end at the earliest as energy-driven inflation reasserts itself forcefully.

Data Spotlight
US initial jobless claims fell 1,000 to 213,000 in the first week of March, slightly below the 215,000 forecasts, while continuing claims dropped 21,000 to 1,850,000, consolidating the picture of a low-hiring, low-firing labour market that contrasts with February's weak payrolls print. Federal employee claims rose 88 to 617, keeping government shutdown labour market concerns on the radar.

The US trade deficit narrowed sharply to $54.5 billion in January, it’s the lowest since October and well below the $66.6 billion forecast as exports jumped 5.5% to a record $302.1 billion led by gold, computers, and civilian aircraft, while imports declined 0.7%. Housing starts surged 7.2% to 1.487 million in January, their highest since February 2025 and well above the 1.35 million forecast driven by a 29.1% jump in multi-family starts, though single-family starts slipped 2.8%.

Takeaway:
January's trade and housing numbers showed economic strength with record exports, shrinking deficit, and rising housing starts. But these figures came before the West Asia conflict and energy shock. The drop of 92,000 jobs in February highlights how conditions can quickly worsen, and March data may show even sharper declines.

WHAT HAPPENED OVERNIGHT

• US stocks tumble over 1.5% as $100 oil, private credit stress trigger broad selloff
  • US stocks fell more than 1.5% with the S&P 500 posting its biggest three-day percentage drop in a month.
  • Iranian strikes on two oil tankers sent crude surging toward $100, directly triggering the risk-off cascade.
  • Only energy and select defensive stocks escaped the broad selloff.
  • Private credit stress is spreading rapidly, Morgan Stanley limited redemptions at one of its funds, JPMorgan reduced loan valuations to private credit funds, and Partners Group warned default rates could double in coming years.
  • Morgan Stanley fell 4.1% and JPMorgan slid 1.6% on the private credit deterioration news.
  • Bumble surged 34.2% after fourth-quarter revenue guidance beat estimates — a rare bright spot.
  • Dollar General slid 6.1% after a disappointing annual comparable sales forecast.
  • LyondellBasell and Dow jumped 10.3% and 9.3% respectively after Citigroup upgraded both of the new export opportunities arising from West Asia supply chain disruptions.
• US Treasury yield hits 4.25% as $100 oil, Hormuz closure and defence spending fears combine
  • The 10-year US Treasury yield edged up to 4.25%, extending to a 13 basis point climb over the prior two sessions.
  • Iran's new Supreme Leader declaring the Hormuz closure permanent "out of necessity" removed any residual hope of a near-term energy price ceiling.
  • Yields are now driven by three forces simultaneously — energy inflation, fiscal deterioration, and geopolitical risk premium.
  • The 10-year has now surged nearly 30 basis points from its sub-4% lows hit just two weeks ago, one of the sharpest short-term moves of the past year.
  • With the Fed meeting next week and no good policy options available, markets are repricing for a prolonged higher-for-longer environment.
• US Dollar tops 99.6 as $100 oil and Hormuz closure drive safe-haven surge
  • The US dollar index topped 99.6, it’s highest since November 2024, extending gains for a fourth consecutive session.
  • The euro fell for a third straight day as surging energy prices disproportionately threatened Europe's import-dependent economy.
  • Iran's new Supreme Leader declared the Strait of Hormuz should remain closed and warned the war would continue "out of necessity" with "other fronts being considered."
  • Brent breaking $100 directly fuelled inflation expectations, reinforcing the dollar's dual safe-haven and inflation-hedge appeal.
  • The dollar is now approaching its strongest levels of the year, driven entirely by geopolitical fear rather than US economic outperformance.
  • With Iran opening new fronts and Hormuz closure now official policy, safe-haven demand shows no signs of abating in the near term.
• Crude oil breaks $100 for first time since 2022 as Iran vows to keep Hormuz shut
  • Brent crude surged 9.2% to $100.46/barrel, breaching the critical $100 threshold for the first time since August 2022.
  • WTI jumped 9.7% to $95.70/barrel, also its highest since August 2022.
  • Iran's new Supreme Leader vowed to keep the Strait of Hormuz shut, removing any near-term hope of shipping normalisation.
  • Iran stepped up attacks on oil and transport facilities across the West Asia region, directly targeting the energy infrastructure markets depend on.
  • Brent touched a session high of $101.60 with Iran's $200 warning now looking less extreme by the session.
  • The $100 breach is a psychological and economic milestone that is triggering automatic inflation and recession risk models across central banks and corporates globally.

Day’s Ledger*

Economic Data

• India Credit-Deposit Data 
• India Foreign Exchange Reserves Data

 Corporate Actions

• Arco Leasing board to consider warrant issue
• HDIL board to consider Q4-Dec quarterly earnings
• Websol Energy board to consider conversion of warrants

 Tickers to Watch

• Infosys to expand Noida centre, new campus to seat 3,000 employees
• DLF Express Europe presses ahead with West Asia investments despite war
• Aster DM Healthcare to add 4,080 beds in next few years
• Akzo Nobel India gets regulatory approval to change name to JSW Dulux
• RIL to invest in US’ first major refinery in 50 years, says Trump
• Bank of Baroda raises $500 million through five-year syndicated loan
• TVS Motor unveils electric scooter Orbiter V1; expands EV portfolio

 Must Read

• India in talks with Iran for safe passage of over 20 tankers via Hormuz
• “Premature to say anything”: MEA on Iran allowing ships via Hormuz
• NSE appoints record 20 merchant bankers for its long-awaited IPO
• Retail inflation rises to 3.21% in February from 2.74% in Jan on new series
• LPG crisis hits food deliveries, gig workers union seeks ₹10,000 relief
• Iran lists 3 demands to end war: Reparations, rights, security guarantees

 

 

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day

India’s deposits are clustering, and the next rate cycle will show it.

Abhishek Dey writes, RBI data shows that the tightening cycle has quietly concentrated bank deposits in the 1–3 year band, making funding costs more sensitive to shifts in the interest-rate cycle.


(*Compiled from various media sources)