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New York
November 12, 2024
1st Afrika
Africa BUSINESS

Oil Falls After Israeli Strike on Iran Bypasses Nuclear Targets

A general view of the newly commissioned Dangote petroleum refinery in Ibeju-Lekki, Lagos, Nigeria. Picture: TEMILADE ADELAJA, REUTERS

Singapore  The yen hit a three-month low on Monday as Japan’s ruling party lost its parliamentary majority, while oil tumbled after Israel’s weekend strike on Iran bypassed oil or nuclear targets. Japan’s Nikkei, after initially falling, rose 1.6% and the yen slipped as far as 0.5% to ¥153.3 to the dollar following the ruling Liberal Democratic Party’s (LDP) weakest result since 2009 in Japan’s weekend election.

Brent crude futures were 4.2% lower and traded as cheaply as $71.99 a barrel after Israel’s response to an Iranian missile attack focused, so far, on missile factories and other sites near Tehran and not on disrupting energy supplies.

In Japan, the LDP which has ruled for most of the post-war years and junior coalition partner Komeito won 215 lower-house seats at Sunday’s election, public broadcaster NHK reported. This falls well short of the 233 needed for a majority and the yen was squeezed since investors figured any government that emerges is likely to make a dovish shift in economic policies.

The markets are likely to think this means more trouble for the yen with 155 the first target and [the finance ministry’s] line in the sand at 160,  said Bob Savage, head of markets strategy and insights at BNY in a note. Gains in the stock market, which often moves in the opposite direction to the yen as a weaker currency can help exporters, were led by technology companies.

Broader currency markets were steady, leaving the dollar on course for its largest monthly rise in two-and-a-half years as signs of strength in the US economy and the prospect of a Donald Trump presidency have driven US yields sharply higher.

At 4.23%, benchmark 10-year treasury yields are up 43 basis points (bps) through October, against a rise of 16bps for 10-year bunds and 23bps for gilts.

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