S&P 500 notches record-high close; GM slumps as tariffs bite

The S&P 500 eked out a record-high close on Tuesday, following steep losses in General Motors and a gain in Tesla as investors focused on recent and upcoming quarterly reports and watched for signs of progress in US trade discussions.

GM tumbled 8.1% after the automaker reported a USD 1 billion hit from tariffs to its quarterly results, adding more fuel to investor concerns about US President Donald Trump’s global trade policy. Shares of Ford Motor fell about 1%.

Tesla climbed 1.1% a day before its quarterly report, while Alphabet, also reporting on Wednesday, rose 0.65%.

Optimism about heavy spending on artificial intelligence has underpinned a rally in Wall Street’s most valuable companies, with the S&P 500 trading around record highs.

“The market is consolidating recent gains and is in a bit of a holding pattern with some huge catalysts over the next week or two, including the August 1 tariff deadline and a lot of important Magnificent Seven earnings,” said Ross Mayfield, an investment strategy analyst at Baird.

Other Big Tech stocks lost ground, with Meta Platforms and Microsoft both losing about 1%.

Shares of RTX dropped 1.6% after the aerospace and defense giant took a hit from Trump’s trade war despite strong demand for its engines and aftermarket services.

Lockheed Martin tumbled almost 11% after its quarterly profit plunged by about 80%.

US trade policy remains a major point of uncertainty for investors and companies as Trump’s self-imposed August 1 deadline for many countries to reach agreements with the White House approaches.

US Treasury Secretary Scott Bessent said he would meet his Chinese counterpart next week to discuss an extension to the August 12 deadline set for tariffs on imports from China.

Other trade negotiations appeared stalled, with optimism for a breakthrough deal with India waning and EU officials weighing countermeasures against the United States.

The S&P 500 climbed 0.06% to end the session at 6,309.62 points.

The Nasdaq declined 0.39% to 20,892.69 points, while the Dow Jones Industrial Average rose 0.40% to 44,502.44 points.

Nine of the 11 S&P 500 sector indexes rose, led by healthcare, up 1.9%, followed by a 1.78% gain in real estate.

Volume on US exchanges was relatively heavy, with 18.8 billion shares traded, compared with an average of 17.7 billion shares over the previous 20 sessions.

Philip Morris slumped 8.43% after reporting second-quarter revenue below expectations, as shipments of its ZYN nicotine pouches disappointed investors.

Analysts on average expected S&P 500 companies to report a 7% increase in earnings for the second quarter, with technology heavyweights driving much of that gain, according to LSEG.

After last week’s mixed economic data, traders have all but ruled out an interest-rate cut from the US Federal Reserve at next week’s policy meeting. They now see about a 60% chance of a reduction in September, according to the CME’s FedWatch tool.

Advancing issues outnumbered falling ones within the S&P 500 by a 4.3-to-1 ratio.

The S&P 500 posted 21 new highs and 1 new low; the Nasdaq recorded 73 new highs and 41 new lows.

(Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru, and by Noel Randewich in San Francisco; Editing by Pooja Desai and Matthew Lewis)

De-risking mood adds more demand for US corporate bonds

Investors have begun to de-risk their equity portfolios and buy more investment-grade corporate bonds as US stock indices near new record highs, in turn pushing corporate borrowing costs to their tightest levels since 1998 for the second time in eight months.

Credit spreads have recovered since they were forced sharply wider on April 2, or ‘Liberation Day’, when President Donald Trump announced trade tariffs and the market became uneasy about corporate fundamentals in a potential environment made susceptible to inflationary pressures and slower economic growth.

The average investment-grade bond spread last stood at 80 basis points (bps), which is just 3 bps away from its lowest point of 77 hit in 1998 and had previously touched last November, according to ICE BAML data. It had touched 121 bps, or its highest since November 2023, in the days after Liberation Day.

The recovery has come on the back of optimism, confirmed by recent corporate earnings, that the highest-rated companies had used the past year to reform balance sheets by paying down debt, avoiding costly acquisitions, and were prepared for an economy impacted by the inflationary impulse of tariffs or a trade war.

“The sharp tightening of credit spreads seen since Liberation Day is based on perception that trade and tariff risks have peaked. . .it also can be attributed to investors’ confidence in US corporate fundamentals,” said Edward Marrinan, credit strategist at SMBC Nikko Securities.

The Federal Reserve’s reluctance to cut interest rates substantially, with inflation still stubbornly above preset targets, has also kept corporate bond yields high enough to attract strong demand from yield-focused investors like insurance companies and pension funds.

But worries that corporate valuations are nearing a peak have also prompted some investors to shift money from equities to investment-grade corporate bonds, adding an extra level of pressure on credit spreads, said bankers.

This heightened investor demand coupled with an overall market shift out of equities into debt could push spreads tighter in the coming months, said Michael Levitin, managing director and co-head of liquid credit at asset management firm MidOcean Partners.

“For the first time that I can think of in my career, we’re seeing a shift out of equities into debt,” he added, noting it was driven by those beginning to realize they may not get the same return out of equities as they did before.

“We have had more conversations, interest in credit strategies and investment-grade fixed income given the run-up in equities,” said Nick Elfner, co-head of research at Breckinridge Capital Advisors.

About USD 10 billion has moved out of domestic equity funds and ETFs since the beginning of 2025, at the same time as over USD 180 billion has flowed into taxable bond funds and ETFs, according to data from the Investment Company Institute. This reflects the added demand for fixed income, Elfner noted.

Companies in the meantime are taking full advantage of this rush of demand for their bonds and raising new debt, while paying little to no new-issue premium as order books are heavily oversubscribed.

The average new issue concession on nearly USD 51 billion of corporate bonds issued in July was a measly 2 bps with order books covered by over four times, according to Informa Global Markets data.

To be sure, analysts and strategists expect this dream run in spreads to reverse, albeit gradually, in the second half, especially if the current optimism about the tariff impact on credit fundamentals is found to be misplaced.

“Our base case for (investment grade) credit spreads is widening, not tightening, as we have a forecast of 110 bps through year-end, but that number is still well within the long-term median level for spreads (of) 130 bps,” said Winnie Cisar, global head of strategy at CreditSights.

Companies have had a lot of power to push through pricing to consumers and maintain strong margins despite these macroeconomic headwinds – yet a period of rising interest rates means interest coverage has come down from record highs in 2021 and created a mixed picture for credit fundamentals, Cisar added.

“If interest expense is somewhat elevated and concerns grow around the trajectory for growth and profit margins, that could act as a catalyst for a widening in spreads.”

(Reporting by Shankar Ramakrishnan and Matt Tracy; Editing by Alexandra Hudson)

Dollar indecisive as investors await more tariff clarity

SINGAPORE – The dollar traded in a tight range on Tuesday after a brief fall at the start of the week, as investors watched out for any progress on trade talks ahead of an August 1 deadline for countries to strike deals with the US or face steep tariffs.

The yen mostly held to gains from the previous session following results from a weekend upper house election in Japan that proved no worse than what had already been priced in, as focus now turns to how quickly Tokyo can strike a trade deal with Washington and Prime Minister Shigeru Ishiba’s future at the helm.

The Japanese currency was last a touch weaker at 147.65 in early Asia trade, after rising 1% on Monday in the wake of the election outcome.

The bruising defeat suffered by Ishiba and his ruling coalition also drew just a modest response in the broader Japanese market, which returned from a holiday in the previous session. JP/ .T

“The initial relief for the yen that the ruling coalition did not lose even more seats and that Prime Minister Ishiba plans to hang on to power is likely to prove short-lived,” said MUFG senior currency analyst Lee Hardman.

“The pick-up in political uncertainty in Japan could complicate reaching a timely trade deal with the US, posing downside risks for Japan’s economy and the yen.”

With just slightly over a week to go before an August 1 deadline on tariffs, US Treasury Secretary Scott Bessent said on Monday that the administration is more concerned with the quality of trade agreements than their timing.

Asked whether the deadline could be extended for countries engaged in productive talks with Washington, Bessent said President Donald Trump would make that decision.

Uncertainty over the eventual state of tariffs globally has been a huge overhang for the foreign exchange market, leaving currencies trading in a tight range for the most part, even as stocks on Wall Street have scaled fresh highs.

“Nothing that happens on August 1 is necessarily permanent, so long as the US administration remains willing to talk, as was indicated in Trump’s letters from two weeks ago,” said Thierry Wizman, global FX and rates strategist at Macquarie Group.

The dollar was last steady after slipping in the previous session due in part to the yen’s rise and a dip in US Treasury yields, leaving sterling trading 0.03% lower at USD 1.3488.

The euro fell 0.12% to USD 1.1684, with focus also on a rate decision by the European Central Bank later this week, where expectations are for policymakers to stand pat on rates.

The European Union is exploring a broader set of possible counter measures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats.

Against a basket of currencies, the dollar rose slightly to 97.94, after having fallen 0.6% on Monday.

Also weighing on investors’ minds has been worries about the Federal Reserve’s independence, given Trump has railed repeatedly against Chair Jerome Powell and urged him to resign because of the central bank’s reluctance to cut interest rates.

“Our base case remains that solid US data and a tariff driven rebound in inflation will keep the FOMC on hold into 2026, and that the resulting shift in interest rate differentials will drive a continued rebound in the dollar in the next few months,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.

“But that view is clearly at the mercy of the White House’s whims.”

Elsewhere, the Australian dollar eased 0.05% to USD 0.6522, while the New Zealand dollar fell 0.14% to USD 0.5960.

(Reporting by Rae Wee; Editing by Shri Navaratnam)

S&P 500 and Nasdaq notch record high closes, lifted by Alphabet

The S&P 500 and the Nasdaq notched record high closes on Monday, lifted by Alphabet and other megacaps ahead of several earnings reports this week, while investors bet on potential trade deals to blunt economic damage from the Trump administration’s global tariffs.

Google-parent Alphabet rallied 2.7% ahead of its quarterly report on Wednesday. It and Tesla, also reporting on Wednesday, kick off earnings from the so-called “Magnificent Seven”, and their results may set the tone for other heavyweight companies reporting in the next several days.

Tesla dipped 0.35%, while Apple gained 0.62% and Amazon rose 1.43%, both lifting the S&P 500 and Nasdaq.

Verizon rallied over 4% after the telecommunications company boosted its annual profit forecast.

Analysts on average expected S&P 500 companies to report a 6.7% increase in earnings for the second quarter, with Big Tech driving much of that gain, according to LSEG.

“So far, companies that have reported have, in general, met or beat guidance from the prior quarter, and we haven’t seen any degradation either in corporate profits or consumer spending,” said Tom Hainlin, national investment strategist at US Bank Wealth Management in Minneapolis.

With US President Donald Trump’s August 1 tariff deadline approaching, the S&P 500 is up about 8% year to date, with investors betting the economic damage from tariffs will be less than feared.

US Commerce Secretary Howard Lutnick said on Sunday he was confident the United States could secure a trade deal with the European Union, even as EU members explored possible countermeasures against the United States.

Trump has threatened 30% tariffs on imports from Mexico and the EU, and sent letters to other trading partners, including Canada, Japan and Brazil, setting tariffs ranging from 20% to 50%.

The S&P 500 climbed 0.14% to end the session at 6,305.60 points.

The Nasdaq gained 0.38% to 20,974.18 points, while the Dow Jones Industrial Average declined 0.04% to 44,323.07 points.

Seven of the 11 S&P 500 sector indexes rose, led by communication services, up 1.9%, followed by a 0.6% gain in consumer discretionary.

Volume on US exchanges was relatively heavy, with 19.7 billion shares traded, compared to an average of 17.7 billion shares over the previous 20 sessions.

The S&P 500 has gained about 7% in 2025, while the Nasdaq has climbed almost 9%.

Investors focused on how tariff uncertainty is impacting the US economy will scrutinize jobless claims data and the July business activity report, expected on Thursday.

They will also watch a speech by Federal Reserve Chair Jerome Powell on Tuesday for clues about when the Fed might cut interest rates, especially after mixed inflation signals last week.

Traders have largely ruled out a July rate cut, and they now see a greater than 50% chance the Fed will cut by its September meeting, according to CME Group’s FedWatch tool.

Declining stocks outnumbered rising ones within the S&P 500 by a 1.7-to-one ratio.

The S&P 500 posted 17 new highs and 9 new lows; the Nasdaq recorded 97 new highs and 56 new lows.

(Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru, and by Noel Randewich in San Francisco; Editing by Maju Samuel, Shinjini Ganguli, and Aurora Ellis)

European shares end lower as investors assess mixed earnings; focus on trade talks

European shares ended a choppy session in the red on Monday, as investors weighed a mixed bag of corporate earnings and keenly awaited the outcome of ongoing trade negotiations between the US and the European Union.

The pan-European STOXX 600 index closed 0.1% lower, as a drop in healthcare stocks such as Roche and Novonordisk offset gains in mining companies.

Traders were gearing up for a week filled with corporate updates in both Europe and the US, and will scrutinize company reports for any clues on the impact trade uncertainty has had on profitability and consumer demand.

On Monday, Stellantis said it expects a net loss of 2.3 billion euros (USD 2.68 billion) for the first half of 2025 as the automaker faced the dual challenge of revamping its product ranges while also dealing with the impact of US tariffs.

Shares of the automaker were volatile throughout the day and settled about 1.5% higher.

Ryanair jumped 5.7% after Europe’s largest low-cost carrier reported that its quarterly profit more than doubled. Other airline stocks such as Lufthansa and EasyJet gained about 1% each.

Meanwhile, trade negotiations were high on the radar as diplomats said that the EU is exploring wide-ranging “anti-coercion” measures which would let the bloc target US services or curb access to public tenders in the absence of a deal.

US President Donald Trump has threatened 30% duties on imports from Europe if no agreement is signed before the August 1 deadline.

“The question ultimately boils down to whether the EU can swallow an unbalanced outcome which is tilted in favour of the US, or whether Trump would accept some form of EU countermeasures without ratcheting up tariffs further,” said Henry Cook, senior economist at MUFG bank.

“The landing ground for a deal still looks small, and there is plenty of risk that things could go south.”

The benchmark STOXX 600 has recovered all its losses from the April selloff when Trump slapped tariffs on world economies. However, trade ambiguities and their impact on corporates have kept investors wary.

The prevailing uncertainty had investors also flocking to safe-havens, including gold XAU= and European sovereign bonds on Monday.

Among stocks, Delivery Hero logged its biggest one-day jump of over 16% in more than a year. On Friday, Prosus had offered to slash its stake in the German company and give up its board seat to address EU concerns over its 4.1 billion euro (USD 4.78 billion) Just Eat Takeaway deal, according to sources.

Miners Glencore, Anglo American, and Antofagasta rose between 3% and 5%, tracking a rise in industrial metal prices after China vowed to stabilize its industrial growth, and on hopes for more stimulus.

Markets also await the ECB’s policy decision later this week, with traders pricing in no change in interest rates.

(Reporting by Sanchayaita Roy, Ragini Mathur, Twesha Dikshit, and Johann M Cherian in Bengaluru; Editing by Eileen Soreng and Maju Samuel)

Morgan Stanley stays bullish on US stocks

Morgan Stanley backed its bullish stance on US equities on Monday, citing strong earnings momentum, and said it was expecting a modest pullback in the third quarter that could create an opportunity to buy the dip.

The Wall Street brokerage is leaning more towards its bull case of the benchmark S&P 500 hitting 7,200 points by the middle of the year, it wrote in a note. In May, the brokerage said the S&P 500 was expected to hit 6,500 in the second quarter of 2026.

“With earnings on solid footing into next year and the Fed closer to cutting rates, valuations can remain supported around current levels (~22x) as we think about the 12-month outlook,” Morgan Stanley equity strategists led by Michael Wilson said.

However, the brokerage said rising Treasury yields – especially the 10-year note US10YT=RR breaching above 4.5% – could increase rate sensitivity for equities and an underperformance of rate-sensitive stocks such as small caps.

Morgan Stanley also expects tariff-related cost pressures to show up later this year, which could impact company margins and bump up inflation, leading to a change in rate cut expectations by the Federal Reserve.

Lastly, it estimates that seasonal trends may hit stocks in from mid-July through August.

However, the brokerage said it would buy the dips as the risks could be temporary and only lead to a mild consolidation.

Jefferies also raised its S&P 500 year-end target to 5,600 from its previous forecast of 5,300, according to the brokerage’s note published on Friday.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Anil D’Silva)

Yen firms as investors gird for political uncertainty

The yen firmed on Monday after Japan’s ruling coalition lost its majority in the upper house as investors braced for a period of policy paralysis and market tumult in the world’s fourth-largest economy ahead of a deadline on tariff negotiations with the US.

The Japanese markets are closed for the day leaving the yen as an indicator of investor angst. Prime Minister Shigeru Ishiba’s Liberal Democratic Party returned 47 seats, short of the 50 seats it needed to ensure a majority in the 248-seat upper chamber in an election where half the seats were up for grabs.

The yen firmed to 148.32 per dollar in early trading, staying close to the 3-1/2-month low it hit last week as the election result was mostly priced in by investors. It firmed a bit against the euro to 172.64.

While the ballot does not directly determine whether Ishiba’s administration will fall, it heaps political pressure on the embattled leader who also lost control of the more powerful lower house in October.

Chris Weston, head of research at Pepperstone, said the LDP coalition could still partner with the Democratic Party for the People (DPP) to get the 50 seats required, and “that is helpful for the yen.”

“However, most importantly, PM Ishiba has been defiant in his stance to stay the course as PM, but his hand has been sufficiently weakened.”

The election result, while not entirely a shock to markets, also comes at a tricky time for a country trying to get a tariff deal with US President Donald Trump before an Aug. 1 deadline.

Japanese government bonds (JGBs) plunged last week, sending yields on 30-year debt to an all-time high, while the yen slid to multi-month lows against the US dollar and the euro.

If Ishiba resigns, the political maelstrom could be a trigger for foreign investors to sell Japanese shares and the yen, analysts said.

Elsewhere, investor focus has been firmly on Trump’s global tariff salvos, with a Financial Times report last week indicating the US president was pushing for steep new tariffs on European Union products.

The euro was steady at USD 1.163225 in early trading, while sterling last fetched USD 1.13417. The dollar index, which measures the US currency against six others, was at 98.352.

The New Zealand dollar eased 0.18% to USD 0.5951 after annual consumer inflation accelerated in the second quarter but stayed below economists’ forecasts, leading markets to raise the chance of a rate cut next month given the broader economic weakness.

In cryptocurrencies, bitcoin fell 1% to USD 116,939, holding below a record USD 123,153 reached last week.

(Reporting by Ankur Banerjee in Singapore
Editing by Shri Navaratnam)

US House passes stablecoin legislation, sending bill to Trump

The US House of Representatives on Thursday passed a bill to create a regulatory framework for US-dollar-pegged cryptocurrency tokens known as stablecoins, sending the bill to President Donald Trump, who is expected to sign it into law.

The vote marks a watershed moment for the digital asset industry, which has been pushing for federal legislation for years and poured money into last year’s elections to promote pro-crypto candidates.

House lawmakers also passed two other crypto bills, sending them next to the Senate for consideration. One lays out a regulatory framework for crypto, and the other would ban the US from issuing a central bank digital currency.

The stablecoin bill, known as the Genius Act, and the crypto market structure bill, known as the Clarity Act, both received notable bipartisan support. Democratic lawmakers joined with Republicans to pass the stablecoin bill 308-122.

Stablecoins, a type of cryptocurrency designed to maintain a constant value, usually a 1:1 dollar peg, are commonly used by crypto traders to move funds between tokens. Their use has grown rapidly in recent years, and proponents say that they could be used to send payments instantly.

If signed into law, the stablecoin bill would require tokens to be backed by liquid assets – such as US dollars and short-term Treasury bills – and for issuers to publicly disclose the composition of their reserves on a monthly basis.

Blockchain Association CEO and former Commodity Futures Trading Commission official Summer Mersinger described Thursday’s votes as a “defining moment in the evolution of US digital asset policy.”

The crypto sector has long pushed for lawmakers to pass legislation creating rules for digital assets, arguing that a clear framework could enable stablecoins and other crypto tokens to become more widely used. The sector spent more than USD 119 million backing pro-crypto congressional candidates in last year’s elections and has worked to paint the issue as bipartisan.

The House of Representatives passed a stablecoin bill last year, but the Senate – in which Democrats held the majority at the time – did not take up that bill.

Trump has sought to broadly overhaul US cryptocurrency policies after courting cash from the industry during his presidential campaign.

Tensions on Capitol Hill over Trump’s various crypto ventures at one point threatened to derail the digital asset sector’s hope of legislation this year, as Democrats have grown increasingly frustrated with Trump and his family members promoting their personal crypto projects.

Trump’s crypto ventures include a meme coin called $TRUMP, launched in January, and a business called World Liberty Financial, a crypto company owned partly by the president.

The White House has said there are no conflicts of interest present for Trump and that his assets are in a trust managed by his children.

Clarity Act sent to Senate

The Clarity Act, which passed 294-134, would critically define when a cryptocurrency is a security or a commodity and clarify the Securities and Exchange Commission’s jurisdiction over the sector, something crypto companies aggressively disputed during the Biden administration.

Crypto companies have argued that most tokens should be classified as commodities instead of securities, which would enable platforms to more easily offer those tokens to their customers by not having to comply with a raft of securities laws.

That bill would need to pass through the Senate before heading to Trump’s desk for final approval.

Some Democrats fiercely opposed the Clarity Act, arguing it could be a giveaway to Trump’s crypto ventures by enabling softer-touch regulation.

The House also passed a bill prohibiting a central bank digital currency, which Republicans say could violate Americans’ privacy. The issue had been a sticking point in House discussions this week.

(Reporting by Chris Prentice, David Morgan and Douglas Gillison; Editing by Pete Schroeder, Matthew Lewis, Mark Porter and Rod Nickel)

Dollar gains broadly; yen dips before election Japan election

The dollar rebounded broadly on Thursday following a turbulent session on Wednesday when US President Donald Trump denied reports that he was planning to fire Federal Reserve Chair Jerome Powell.

The dollar has rallied this month in what analysts say is largely consolidation following a sharp selloff for most of this year. The dollar index remains down 9% year-to-date. Rising Treasury yields this month are supporting the dollar’s rebound.

“After having a historic sell-off in the first half, the dollar has begun the second half on firmer footing. It looks like mostly short covering backed by these firmer US interest rates,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The dollar extended gains on Thursday after data showed US retail sales rebounded more than expected in June, while the number of Americans filing new applications for jobless benefits fell last week.

However, the greenback quickly fell back to trade close to where it was before the data, which Chandler said shows “the lack of near-term conviction.”

Investors are weighing multiple factors that could influence market direction, including the economic impact of Trump’s tariff policies, the US fiscal and debt outlook, and the Fed’s independence.

The dollar tumbled on Wednesday on reports that Trump was planning to fire Powell soon, before paring losses when Trump denied the news. Trump has said repeatedly that interest rates should be at 1% or lower.

Former Fed Governor Kevin Warsh, seen as a potential successor to Powell, said on Thursday there needs to be a new accord between the Treasury Department and the US central bank, referencing a 1951 pact that separated federal debt management from monetary policy.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last up 0.41% on the day at 98.75, with the euro down 0.45% at USD 1.1582. The single currency earlier reached USD 1.1555, the lowest level since June 23.

In other currencies, sterling weakened after data showed British pay growth slowing in May and employee numbers dropping further last month.

The British pound was last down 0.1% at USD 1.3405.

Concerns also mounted over a pivotal election in Japan and a still elusive trade deal with the US to avoid a punishing rise in tariffs.

Polls showed Prime Minister Shigeru Ishiba’s coalition was in danger of losing its majority in the upper house.

Japan’s top trade negotiator, Ryosei Akazawa, held talks with US Commerce Secretary Howard Lutnick on tariffs on Thursday, as Tokyo races to avert a 25% levy that will be imposed unless a deal is clinched by an August 1 deadline.

The yen weakened 0.58% against the greenback to 148.73 per dollar after touching its weakest level since April 3 in the previous session .

The Australian dollar slid after jobs data badly missed forecasts and unemployment hit highs not seen since late 2021.

The Aussie was last down 0.64% versus the greenback at USD 0.6484.

In cryptocurrencies, bitcoin fell 0.22% to USD 119,676.

(Reporting by Karen Brettell; Additional reporting by Rocky Swift, Lucy Raitano, William Maclean; Editing by Leslie Adler)

Oil jumps USD 1 after further drone attacks on Iraq oil fields

Oil prices rose USD 1 on Thursday after drones struck Iraqi Kurdistan oil fields for a fourth day, pointing to continued risk in the volatile region.

Brent crude futures settled at USD 69.52 a barrel, up USD 1.00, or 1.46%. US West Texas Intermediate crude futures finished at USD 67.54 a barrel, up USD 1.16, or 1.75%.

Officials pointed to Iran-backed militias as the likely source of attacks this week on the oilfields in Iraqi Kurdistan, although no group has claimed responsibility.

Oil output in the semi-autonomous Kurdistan region has been slashed by between 140,000 and 150,000 barrels per day, two energy officials said, more than half the region’s normal output of about 280,000 bpd.

“Some of the gains are reaction to drone attacks in Iraq,” said Andrew Lipow, president of Lipow Oil Associates. “It shows how vulnerable oil supplies are to attacks using low technology.”

Markets have also been jittery while waiting for the imposition of tariffs by US President Donald Trump, which could shift oil supplies from the United States to India and China, Lipow said.

Trump has said letters notifying smaller countries of their US tariff rates would go out soon, and has also alluded to prospects of a deal with Beijing on illicit drugs and a possible agreement with the European Union.

“Near-term prices (are) set to remain volatile due to the uncertainty over the final scale of US tariffs and the resultant impact on global growth,” said Ashley Kelty, an analyst at Panmure Liberum.

US crude inventories fell by 3.9 million barrels last week, government data on Wednesday showed, compared with analysts’ expectations in a Reuters poll for a 552,000-barrel draw.

Last week, the International Energy Agency said that oil output increases were not leading to higher inventories, which showed markets were thirsty for more oil.

Markets were continuing to look for signals of tighter supply or higher demand, said Phil Flynn, senior analyst for Price Futures Group.

Meanwhile, a tropical disturbance in the northern Gulf of Mexico was not expected to develop into a named storm as it makes its way west before moving onshore in Louisiana later on Thursday.

Rainfall totals in Southeast Louisiana are forecast to be about four inches (10 cm), according to the US National Hurricane Center.

(Reporting by Erwin Seba in Houston, Seher Dareen in London, Anjana Anil in Bengaluru and Emily Chow in Singapore. Editing by Marguerita Choy, Kirsten Donovan and Nia Williams)

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