(Corrects U.S. crude closing price to $90.03, not $98.03, in paragraph 5)
By Sinéad Carew and Tom Wilson
NEW YORK/ LONDON, June 10 (Reuters) – MSCI’s global equities index fell 1.5% on Wednesday after economic data showed U.S. inflation was high but in line with expectations and oil prices rose as hopes for Middle East peace progress dwindled after Iran and the United States exchanged strikes and threats.
Oil prices extended gains after U.S. President Donald Trump threatened that the United States would attack Iran “very hard” if no peace deal is finalized. Earlier, Trump wrote in a social media post that Iran would “pay the price” after taking too long to negotiate.
After Fox News reported that Trump is considering ordering new strikes on Iran’s power plants and bridges, Iran’s president said that such threats were a sign of desperation rather than a show of strength. Also, U.S. Energy Secretary Chris Wright told a congressional hearing on Wednesday that he’s not aware that the U.S. has taken millions of barrels of oil out of Iran after Trump told reporters it had.
As the Iran war uncertainty drove up oil prices, in turn a selloff in equities deepened along with a continued unwinding of the AI trade, according to Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
U.S. crude settled up about 2.1% at $90.03 a barrel while Brent settled at $93.10 per barrel, up 1.8%.
“Oil prices have shifted from anxiety to apathy and back again amid renewed skirmishes between the U.S. and Iran,” Phil Flynn, senior market analyst at The Price Futures Group, said.
Investor reactions were more modest earlier in the day after an economic release showed U.S. consumer inflation rose last month at its fastest pace since April 2023. The Labor Department’s Bureau of Labor Statistics reported a 4.2% increase in the Consumer Price Index in the 12 months through May.
Traders maintained bets that the Federal Reserve would hold rates steady after its June 17 meeting and priced in a nearly 43% probability of a 25-basis-point hike versus a less than 32% chance rates would stay unchanged by December, according to CME Group’s FedWatch tool.
Steve Kolano, chief investment officer at Integrated Partners, said that the report “doesn’t do anything to reduce the probability of a possible rate hike at some point this year” with energy prices high and the Iran conflict still unresolved.
Elevated inflation highlights the need for a resolution in Iran so that oil and liquefied natural gas shipments can resume through the Strait of Hormuz, said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
