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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Claudia Goldin wins Nobel economics prize; gas price surges as Israel halts production at Tamar field – as it happened

Hamas Oil Israel United States Tel Aviv Iran Pierre Andurand the Bank of Israel the Middle East Bank of Israel
Claudia Goldin speaking to a reporter on the phone in her home in Cambridge, Massachusetts, after learning that she received the Nobel Prize in Economics today.
Claudia Goldin speaking to a reporter on the phone in her home in Cambridge, Massachusetts, after learning that she received the Nobel Prize in Economics today. Photograph: Josh Reynolds/AP

Closing post

Time for a recap.

Financial markets have been gripped by the shocking attack by Hamas on Israel on Saturday, which has driven up energy prices and hammered shares in airlines.

The oil price is up around 4% in late trading, with Brent crude rallying toward $88 per barrel, as traders calculate that rising tensions across the Middle East could affect output from leading oil producers.

As Capital Economics point out this evening:

First and foremost, the renewed fighting between Hamas and Israel since the weekend is a humanitarian tragedy.

The upshot is that the longer the conflict goes on or the more widespread it becomes, the greater the risks to regional oil supply will be.

Gas prices have jumped sharply, after Israel suspended production at the Tamar gas field in the eastern Mediterranean.

Shares in defence producers have jumped, with BAE Systems up 4.7% in London and Northrop Grumman gaining 10% in New York.

But airlines including IAG (-5.6%), Wizz Air (-6.8%) and easyJet (-5.2%) and holiday firm TUI (6.3%) are down, on concerns the crisis will hit travel.

As investors searched for safe havens, the US dollar, European government bonds and gold all rallied today.

The conflict has also prompted Nvidia to cancel an AI conference in Tel Aviv later this month.

Israel’s central bank stepped in to stabilise its currency this morning. The Bank of Israel said it will sell up to $30bn of foreign currency in the open market to maintain stability, after the shekel hit its lowest level in almost eight years against the US dollar.

Here’s the latest:

And here’s our live-blog on the conflict:

In other news…

Harvard professor Claudia Goldin, has won the Nobel Prize for economics for her work advancing the understanding of women’s labour market outcomes.

The Royal Swedish Academy of Sciences said Goldin had uncovered key drivers of gender differences in the labour market.

Jakob Svensson, Chair of the Committee for the Prize in Economic Sciences, explained:

“Understanding women’s role in the labour is important for society. Thanks to Claudia Goldin’s groundbreaking research we now know much more about the underlying factors and which barriers may need to be addressed in the future.”

Metro Bank is launching a fresh cost-cutting drive after the embattled lender clinched a £925m rescue package from investors last night:

Britain’s manufacturers are urging the chancellor, Jeremy Hunt, to announce a “major MOT” of the UK’s “uncompetitive” business tax and regulatory system in his autumn statement next month.

FTSE 100 close

BAE Systems has ended the day as the top riser on the FTSE 100 index, up 4.5%.

BP and Shell both gained almost 3% by the close, lifted by the jump in the oil price today.

But the index was dragged down by British Airways’ parent company IAG (5.8%), and chemicals group Croda (-7.2%) which cut its profit guidance today.

This has left the FTSE 100 down 2 points, or 0.03%, at 7492 points.

Updated

Britain’s FTSE 250 index, which contains companies too small for the FTSE 100, has had a rough day.

The FTSE 250 is down almost 1% in late trading, down 163 points at 17,568 points.

Energean, the London and Tel Aviv-listed oil and gas group, are now down 20% on concerns that its production facilities off the coast of Israel could be affected by the conflict.

Wizz Air are down 6.6%, and cruise operator Carnival are off 6.3%, on concerns that travel demand will be hit.

Chipmaking giant Nvidia has canceled a conference on artificial intelligence which was due to take place in Tel Aviv next week due to safety concerns.

Nvidia had scheduled its in-person AI summit, with a keynote by CEO Jensen Huang, for October 15 and 16 at Tel Aviv, calling it “the #1 conference for developers, business leaders, and AI researchers.”

About 2,500 developers, researchers and tech workers were set to attend the two-day conference, according to CNBC.

More than 60 live sessions were expected, on topics ranging from generative AI, supercomputing and large language models, to autonomous vehicles, healthcare and cybersecurity. More here.

Travel stocks are weakening in New York, following similar losses in Europe today.

Cruise operator Carnival Corp are down 6.3%, followed by Delta Air Lines (-5.1%), American Airlines (-5.1%) and United Airlines (4.9%).

Over in New York, the US stock market has opened in the red, but shares in weapons makers and oil companies are rallying.

The S&P 500 index of US stocks has dipped by 0.2%, down 8 points at 4,301 points.

But defence firms are strengthening, with Northrop Grumman - who make are range of military kit including smart ammunition - up 8.5% and Lockheed Martin gaining 8%.

Oil services firm Halliburton has gained 5%, and Marathon Oil are up 4%, following the jump in the crude price today.

Updated

Gas prices jump as Israel halts production at Tamar

European gas prices have jumped today, after Israel has suspended production at the Tamar gas field off its southern coast.

US energy producer Chevron said it had been instructed by Israel’s energy ministry to shut down the Tamar natural gas field off the country’s northern coast.

In a statement, Chevron said:

“Chevron Mediterranean Limited was instructed by Israel’s Ministry of Energy to shut in production at the Tamar Production Platform.”

The Tamar natural gas reservoir is located approximately 55 miles (89 kilometers) off Israel’s northern coast, west of Haifa.

News of the shutdown, due to safety concerns after Hamas’s attacks over the weekend, have pushed the European month-ahead gas benchmark up 9.7% to €41.83 per megawatt hour.

The UK day-ahead gas price has surged by 18% to 94.1p per therm, with the month-ahead contract up 12% at 106.6p per therm.

Some of Tamar’s gas is also exported to neighbouring Jordan and Egypt, reports Reuters.

Israel’s energy ministry said in a statement that:

“In the wake of the situation, Israel’s defence establishment ordered the temporary suspension of natural gas supplies from the Tamar field.

“The economy’s energy needs will be supplied by alternative fuels. The power industry is preparing to use alternative fuels to power its stations.”

As flagged earlier, shares in oil exporation company Energean are down 19% this afternoon, on fears that its operations in the Eastern Mediterranean could be disrupted.

Updated

FT: Odey to close wealth management business

Odey Asset Management’s wealth business is to close and return assets to clients months after founder Crispin Odey was accused of sexual misconduct, according to the Financial Times.

They explain:

The wealth business is closing in both Guernsey and the UK, according to people familiar with the matter.

The Financial Conduct Authority, the UK regulator, said of the closure: “We are aware of Odey Wealth Management’s intention to wind down the business. We will work closely with the firm as it winds down, to ensure clients are treated fairly.”

The decision to wind down the business comes after the FT published an investigation in June that included detailed allegations from 13 women of sexual assault and harassment by the firm’s eponymous founder.

Brian Albrecht, economist, has written a handy thread on Claudia Goldin’s academic work:

He also highlights the u-shaped curve for female labour force participation, which we flagged earlier:

The dash for safe-haven assets has lifted gold up from a seven-month low today.

Investors have pushed up the price of an ounce of gold to $1,845 today. Last Friday it traded as low as $1,809/oz, the lowest since the end of February.

Craig Erlam, analyst at OANDA, says:

Gold is higher at the start of the week, buoyed perhaps by some safe-haven flows against the backdrop of geopolitical uncertainty. The dollar is also stronger which is typically a headwind for gold but it’s not proving particularly problematic this morning.

The yellow metal has been under immense pressure in recent weeks as investors became increasingly unsure about the inflation and interest rate environment and yields soared. That appears to have steadied for now but policymakers will have plenty of chance to calm nerves - or reinforce those concerns - this week.

The oil price is continuing to rally, with Brent crude up 4% today at around $88 per barrel.

Raffi Boyadjian, lead investment analyst at XM, says there is a danger of disruptions to oil supply in the region if Israel were to take any military action against Iran, potentially with the help of the United States.

The main market moves, 9th October 2023

Boyadjian adds:

Washington has already said it is sending an aircraft carrier to the region and while it is too early to speculate, investors are wary of the possibility of Iran blockading the Strait of Hormuz, through which 20% of global oil supply flows, in the event of a wider conflict.

Israel successfully held an auction of government debt this morning.

The Israeli government sold 2 billion shekels (£420m) of bonds in its weekly issuance, receiving bids for almost six times as much debt as was on offer.

The Finance Ministry said the bonds were bought by both local and overseas banks, adding:

“The ability to raise debt and finance the government’s activities, even in times of emergency, in significant volumes and with a particularly high coverage ratio, is evidence of market confidence in Israel.”

Back in the financial markets, shares in defence makers continue to rally following the outbreak of the Israel-Hamas war last weekend.

BAE Systems continue to lead the risers on the UK’s FTSE 100 index, up 3.6%.

European rivals Thales (+3.7%), Leonardo (+4.4%) and Dassault Aviation (+3.8%) are also rising, as traders react to rising geopolitical tensions.

Investing.com explains:

In a note to clients, analysts at Wells Fargo predicted that while defence stocks were likely to outperform in the wake of the sudden escalation of the conflict, the fighting is not expected to result in a long-term change in the American defense spending outlook.

“This could change if the scope of the conflict widens,” the Wells Fargo analysts noted.

US defence firms are set to jump when Wall Street opens in 90 minutes, with Lockheed Martin up 4.8% and Northrop Grumman gaining 3.8%.

Here’s a photo of Claudia Goldin speaking to a reporter on the phone in her home in Cambridge, Massachusetts, after learning that she received the Nobel Prize in Economics today:

Claudia Goldin speaks to a reporter on the phone in her home in Cambridge, Massachusetts. after learning that she received the Nobel Prize in Economics today

Back in the UK, e-commerce giant Amazon is preparing for the Christmas rush by recruiting 15,000 people to fill seasonal roles.

Amazon, which has faced strikes by workers seeking wage rises at its warehouses this year, has also announced a pay rise for its staff of at least £1 an hour.

The minimum starting pay for frontline employees will increase to between £11.80 and £12.50 an hour depending on location.

The rise, for all full-time, part-time, temporary and seasonal roles, will be effective from October 15.

Racheal Fagan, GMB organiser, says:

“This news will bring little comfort to the thousands of Amazon workers facing poverty pay, unsafe working conditions and workplace surveillance.

“Amazon has spent millions fighting their own workers over union rights and fair pay.

“GMB members have forced a pay rise from one of the world’s most powerful corporations – but Amazon can and must do better.”

Claudia Goldin has long been a pioneer for women in economics.

In 1989, for example, she became the first woman to be offered tenure in Harvard’s economics department.

A recent profile published by the International Monetary Fund explained:

Goldin is frequently cited as one of the 10 most influential female economists in the world.

She pioneered the study of women’s role in the economy 40 years ago, inspired new generations of female economists, and helped bring gender economics into the mainstream. Goldin won the IZA Prize in Labor Economics in 2016 and the Society of Labor Economists’ Mincer Prize for lifetime contributions in 2009.

She was president of the American Economic Association in 2013–14 and was the first woman to receive tenure in economics at Harvard and the University of Pennsylvania.

Updated

Jason Furman, the former top economic adviser to President Obama, says Goldin’s success today is “fantastic”.

He also points us to his review of her book, Career and Family, which explained how the gender pay gap was due to institutional hurdles, rather than discrimination – and how having a child has a significant, negative impact on a woman’s earnings.

The Royal Swedish Academy of Sciences do not, unfortunately, have Claudia Goldin on the phone to take questions from reporters – although they have said Goldin was ‘surprised and very, very glad’ to hear she had won.

One of the perils of holding the announcement around noon in Stockholm is that US-based economists tend to be asleep when the winning call comes.

This was a particular problem in 2019, when economist Robert Wilson, then 83, had to wake his colleague Paul Milgrom (then 72) to tell him they had won the prize for their work on auction theory.

Economist Randi Hjalmarsson adds that Goldin’s work has centred on the source of the gender pay gap, and how it has changed through history.

The source of the gender gap in wages, back in the industrialistion period, that was not due to discrimination, but the role of discrimination changed as we moved to offices.

She explains the source of the gap, and how it has changes over time, and changes with stages in development.

Claudia Goldin’s work has shown that female participation in the labour market did not have an upward trend over a 200 year period.

Instread, it forms a U-shaped curve, with fewer women in employment as economies moved from agriculture in the industral revolution, but rose again as the service sector expanded.

The prize-awarding committee explain:

The participation of married women decreased with the transition from an agrarian to an industrial society in the early nineteenth century, but then started to increase with the growth of the service sector in the early twentieth century.

Goldin explained this pattern as the result of structural change and evolving social norms regarding women’s responsibilities for home and family.

Q: What recommendations does Claudia Goldin make to close gender gaps in the workplace?

Economist Randi Hjalmarsson explains that Goldin does not explicitly study policy, or proscribe solutions:

She has described the problem, or the gender gap. It’s not even clear that it is a problem without understanding why it exists.

She has demonstrated that the sources of the gender gap change over time, and understanding what is underlying it is the first step to understanding what one might want do to – if one wants to do anything at all – to affect it.

Hjalmarsson adds that Goldin’s work has provided an “underlying foundation”, which has different policy implications for different countries around the world.

You can’t treat an illness with a medication without knowing what it is, and what causes it.

Updated

Jakob Svensson, chair of the Committee for the Prize in Economic Sciences, tells reporters in Stockholm that Claudia Goldin was “surprised and very, very glad” to get the call this morning that she had won.

Claudia Goldin has been recognised for her work collecting over 200 years of data from the US, which showed how and why gender differences in earnings and employment rates have changed over time.

This work is very important, the Royal Swedish Academy of Sciences say, as women are vastly underrepresented in the global labour market and, when they work, they earn less than men.

Jakob Svensson, Chair of the Committee for the Prize in Economic Sciences, says:

“Understanding women’s role in the labour market is important for society.

Thanks to Claudia Goldin’s groundbreaking research we now know much more about the underlying factors and which barriers may need to be addressed in the future.

Claudia Goldin will receive 11 million Swedish kronor, or around $1m, as the sole winner of this year’s prize.

Claudia Goldin wins Nobel prize in economics for research on women in the workplace

Newsflash: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to US economist Claudia Goldin, for her work on women’s participation in the labour market.

Claudia Goldin, the Harvard-based economics professor, has won the biggest prize in economics “for having advanced our understanding of women’s labour market outcomes”.

Goldin is a pioneer in the field of gender economics, examining why the gender pay gap still exists today.

Goldin has shown that gender gaps will not necessarily close with economic development, and that economic growth does not always improve female labour market outcomes.

The Royal Swedish Academy of Sciences says Goldin’s “groundbreaking research” has shown the underlying factors hurting women in the jobs market, and which barriers may need to be addressed.

They explain:

Despite modernisation, economic growth and rising proportions of employed women in the twentieth century, for a long period of time the earnings gap between women and men hardly closed. According to Goldin, part of the explanation is that educational decisions, which impact a lifetime of career opportunities, are made at a relatively young age. If the expectations of young women are formed by the experiences of previous generations – for instance, their mothers, who did not go back to work until the children had grown up – then development will be slow.

Historically, much of the gender gap in earnings could be explained by differences in education and occupational choices. However, Goldin has shown that the bulk of this earnings difference is now between men and women in the same occupation, and that it largely arises with the birth of the first child.

She becomes the third woman to win the Nobel economics prize, after Elinor Ostrom in 2009 and Esther Duflo in 2019.

[This isn’t one of the original prizes funded by Alfred Nobel, but was created in 1968 by Sweden’s central bank].

Updated

The dash for safer assets is leading to a recovery in the European bond market.

UK gilts are strengthening, which is pulling down the yield (or interest rate) on British debt.

The yield on 30-year UK bonds has slipped to 5.02%, from 5.06% on Friday night, having hit 25-year highs over 5.1% last week.

Here’s AJ Bell investment director Russ Mould on this morning’s market moves:

“As it nearly always does, an escalation of tensions in the Middle East region has helped push up oil prices. This is inevitable given how much of the world’s crude reserves and production are centred there.

“One rare energy stock not benefiting from higher prices was Energean which is developing a substantial gas field in offshore Israel and is therefore right at the heart of the current uncertainty.

“Airlines descended rapidly as the market priced in higher fuel costs and, potentially, less willingness to travel to certain locations.

“The wider risk is that a sustained increase in oil prices would act as a renewed inflationary pressure and further underpin the higher rates for longer message which investors in the equity and bond markets seem to be belatedly coming to terms with.”

Updated

The oil price is holding most of its earlier gains, with Brent crude currently up 2.8% at $86.80 per barrel, up $2.20.

Callum Macpherson, head of commodities at Investec, predicts that the oil price will remain supported until it is clear the supply risks have subsided.

Macpherson says:

“The tragic events in Israel over the weekend have led to comparisons with the Yom Kippur war and the ensuing oil embargo and oil crisis in the 70s, but this is probably a bit of an exaggeration. Israel is at war with a militant group now, not a collation of Arab states as it was then. Hamas does have the backing of Iran, of course.

Consequently, the tentative and informal reproachment with the US could be a causality, and that might lead to a renewed focus on sanctions and limiting Iranian output that had been growing this year. That seems to be the most obvious risk for oil.

William Jackson, chief emerging markets economist at Capital Economics, warns that the economic impact of the Israel-Hamas conflict will depend both how long it lasts, and how far it spreads.

Jackson told clients:

The attack by Hamas militants on Israel on Saturday has led to widespread casualties and deaths, and the declaration of war by Israel’s prime minister. From an economic perspective, the experience from the 2014 Gaza war suggests that the effects on Israel’s economy will be relatively small and short lived. But the situation is in flux and the economic effects will depend on the severity and length of the conflict, and the extent to which it spreads to the broader region.

There are also important geopolitical implications, particularly if the tentative Saudi-Israel peace plan is derailed and/or it leads to greater tensions with Iran, both of which would add upwards pressure to oil prices.

Many stock markets across the Gulf region are in the red this morning.

The Dubai general index has dropped by 2.8% this morning, while Kuwait’s main market is down 1.8% and Qatar has lost 1.3%

Israel’s TA-35 index has lost its early bounce, and is now down 0.5%.

Saudi Arabia’s Tadawul has slipped by 0.35%, with oil giant Saudi Aramco dipping by 0.6%.

British airline Virgin Atlantic said its flights between London Heathrow and from Tel Aviv could face delays or cancellations.

Virgin said it had cancelled flights VS453 and VS454 on Monday and Tuesday, but planned to continue to operate VS457 and VS458.

A cancelled Virgin Atlantic flight from Tel Aviv to London
A cancelled Virgin Atlantic flight from Tel Aviv to London Photograph: Virgin Atlantic/Google

Shares in European-listed companies with major business exposure to Israel are falling this morning.

Energean, the London-based oil producer which is also listed on the Israel stock exchange, have fallen over 14% – the top faller on the FTSE 250 share index. Energean is focussed on the Eastern Mediterranean.

Israel-based antennas maker MTI Wireless’s are down 11.2%.

BATM Advanced, the Israel-headquarted producer of technologies for networking solutions and medical laboratory systems, told the City this morning that “it does not expect the tragic recent developments in Israel to have a material impact on trading”.

But still, BATM’s shares are down 8.5% this morning.

The Israel-Hamas conflict could push the global economy closer to a downturn, if it disrupts oil supplies from the wider region.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains:

“Fears of a potential retaliation against Iran threaten the passage of vessels carrying oil through the Strait of Hormuz and flip the market rhetoric from a potentially slowing global oil demand to tight global supply….

Escalation and prolongation of Mid-East tensions could be the final straw that could bring the world very close to the brink of recession”.

The dash for safe haven assets has pushed the dollar up against both the pound and the euro this morning.

Sterling has lost half a cent, to $1.219 against the dollar, while the euro is also half a cent lower at $1.0535.

Today’s jump in the oil price will fuel inflationary worries.

And it comes at a time when investors are already jittery about the interest rates potentially staying higher for longer, says Susannah Streeter, head of money and markets at Hargreaves Lansdown:

‘‘The shocking attacks in Israel have sent the price of oil soaring, as investors assess the potential for the conflict to disrupt supply in the Middle East, if other countries are drawn in. With the Israeli government warning of a long and difficult war, there are concerns that deep and incessant retaliative strikes on Gaza could potentially bring Iran into the conflict and have an impact on the flow of energy in the region.

Nerves are showing signs of being frayed again just as investors had started to breathe a sigh of relief that the US might be heading for a softer landing, despite the high level of interest rates.

Hungarian airline Wizz Air has joined the ranks of airlines cancelling flights to and from Tel Aviv.

Wizz says flights are on hold until further notice.

A spokesperson says:

“We are continuing to monitor the situation closely and are in touch with the relevant authorities.”

Yesterday, US air carriers United Airlines, Delta Air Lines and American Airlines said they had suspended direct flights, as did Air France and Finland’s Finnair.

Jim Reid of Deutsche Bank points out that Hamas’s attack on Israel on Saturday morning came 50 years after the 1973 Arab–Israeli War, telling clients:

Markets will spend a fair amount of time in the early part of this week trying to understand the implications of the most serious cross-border attack on Israel in decades early on Saturday morning. It was 50 years ago on Friday that the Yom Kippur War started after a surprise attack on Israel so there are some parallels. This war cast a shadow over the rest of the 1970s so although we’re a long way from that, it’s a reminder that geopolitical risk is elevated at the moment with the Ukraine conflict, the US/China tensions and now those resurfacing in the Middle East. How Saudi Arabia, Iran, and the US get drawn into this will be key.

Geopolitical risk doesn’t tend to linger long in markets but there are many second order impacts that could come through in the weeks, months and years ahead from this weekends’ developments.

So far this morning Brent oil is +3.68%, having been around +5% a little earlier in the session. To put this in some context it was down over -11% last week. Israel’s stock market was down -6.5% yesterday. With the US bond market closed for Columbus Day it’s not going to be the most liquid day of trading.

The Tel Aviv stock market has opened 1% higher, having fallen over 6% yesterday.

This follows the Bank of Israel’s pledge sell up to $30bn in foreign exchange to stabilise the shekel (see 7.46am).

Weapons maker BAE System is leading the FTSE 100 risers in early trading, up over 4%.

It’s followed by oil producers BP (2%) and Shell (+1.5%), and gold and silver producer Fresnillo (+1.4%).

Airline shares fall

Shares in airlines are falling sharply at the start of trading in London.

IAG, which owns British Airways, have dropped 5%, while Wizz Air are down 7% and easyJet are down 3.8%.

Across Europe, the travel and leisure sector is down 1.1%.

Several airlines have suspended flight services with Tel Aviv until safety conditions improve, while the rising oil price will also push up costs for airlines.

Updated

Israel’s dollar-denominated government bonds have dropped sharply in early European trading, Reuters reports.

They add:

Israel’s 2060-maturing bond was last down 3.7 cents, which, if maintained, would be its biggest daily drop since the start of 2021, according to LSEG data.

Here’s Victoria Scholar, head of investment at interactive investor, on the situation in the markets this morning:

“Oil prices are staging gains up by around 3.5% driven by the escalation of violence between the Palestinian Islamist group, Hamas and Israel. Israeli prime minister Benjamin Netanyahu said there’s a ‘long and difficult war’ ahead.

It comes after oil suffered its worst weekly slide since March, reversing some of the sharp rally seen between June until the peak in late September. While Israel and Palestine are not oil producers themselves, the Middle East is a key region in terms of global oil output. The Israeli authorities have alleged that Iran, a supporter of Hamas and a key oil exporter, had some involvement in the violence.

However, US Secretary of State Antony Blinken told CNN, ‘we have not yet seen evidence that Iran directed or was behind this particular attack.’ Any indication of significant involvement from Iran could negatively impact its oil exports and in turn lead to higher prices. Meanwhile OPEC+ policy is expected to remain unchanged despite the geopolitical uncertainty with Saudi Arabia and Russia sticking to their voluntary production cuts, also providing support for the oil market.

As the war enters its third day, risk-off sentiment is gripping markets, lifting safe-haven assets like gold, silver, treasuries, the US dollar, and the Japanese yen. Meanwhile investors are selling riskier equities with US futures pointing to a weaker open. The Israeli shekel is also depreciating, touching its weakest level against the US dollar since 2016.”

Updated

Stock markets across the Middle East fell yesterday, led by a 6%+ drop in Tel Aviv, as investors across the region reacted to the Israel-Hamas war.

Bloomberg has the details:

The fallout from Saturday’s surprise attack on Israel by the Palestinian group Hamas reverberated through Middle East markets, sending stocks sliding and setting the tone for what’s likely to be a volatile week.

Major equities gauges in the region fell Sunday, led by a 6.4% drop on Israel’s benchmark TA-35 stock index, its biggest loss in more than three years. The Tadawul All Share Index in Riyadh fell 1.6% while stocks in Qatar and Kuwait also weakened.

The EGX30 gauge in Cairo slumped 2.6% after an Egyptian policeman opened fire on a group of Israeli tourists, killing two of them, in the Mediterranean city of Alexandria.

Updated

The Bank of Israel to sell up to $30bn to support shekel

Israel’s shekel fell to a near eight-year low in early trading, prompting the country’s central bank to step in to support the currency.

The Bank of Israel said it will sell up to $30bn of foreign currency in the open market to maintain stability.

According to Reuters, this is the central bank’s first ever sale of foreign exchange

The Bank of Israel says:

The Bank will operate in the market during the coming period in order to moderate volatility in the shekel exchange rate and to provide the necessary liquidity for the continued proper functioning of the markets.

In addition to the $30 billion program, and as necessary, the Bank will provide liquidity to the market through SWAP mechanisms in the market of up to $15 billion.

The move appeared to quickly calm the market, with the shekel recovering some of its early losses.

It is now trading at 3.89 to the dollar, up from 3.8388 on Friday night, having hit 3.921 earlier today, the weakest since early 2016

The Israeli shekel vs the US dollar over the last 10 years – higher = weaker
The Israeli shekel vs the US dollar over the last 10 years – higher = weaker Photograph: Refinitiv

Reuters adds:

The shekel was already weak, down 10% versus the U.S currency so far in 2023, largely due to the government’s judicial overhaul plan that has sharply curtailed foreign investment.

Introduction: Oil jumps as Middle East conflict shakes markets

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The oil price has jumped over 3% this morning as financial markets are rattled by the Israel-Hamas war:

Brent crude has jumped back to $89 per barrel this morning, recovering a chunk of last week’s losses, on fears that the surprise Hamas attack on Israel could escalate further, lifting tensions across the Middle East and hitting output from leading oil producers.

The risk of sanctions and oil supply shocks in the Middle East has driven up both gold and crude prices, reports Kyle Rodda, senior financial market analyst at Capital.com

Rodda adds:

The human impacts are far more consequential than anything happening in the markets, especially regarding the growing civilian casualties that have already occurred and are likely to increase as tensions escalate.

For those with open positions in the market, there could be ongoing volatility as the situation unfolds. Crude prices could be one barometer of the situation as instability in the region increases, impacting trilateral talks between Israel, the US, and Saudi Arabia and relations between the West and Iran.

Hedge fund manager Pierre Andurand, argues that the oil market could tighten over time, but there is little immediate threat to supplies.

Writing in X (formerly Twitter), Andurand explained:

Many people asked me if the Hamas attacks on Israel will have an impact on oil prices. As the Levant is not a large oil producing region, it is unlikely to impact oil supply in the short term. And therefore one should not expect a large oil price spike in the coming days. But it could eventually have an impact on supply and prices.

Global oil inventories are low, and the Saudi and Russian production cuts will lead to more inventories draws over the next few months. The market will eventually have to beg for more Saudi supply, which I believe, will not happen sub $110 Brent.

The US dollar has also strengthened, as risk sentiment weakens and investors rush into safe havens.

Wall Street is set to open lower, with the Dow Jones industrial average set to fall around 0.7%.

The agenda

  • 10.45am BST: Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel awarded

  • 11am BST: Ireland’s industrial production for August

  • 1pm BST: Mexico’s inflation rate for September

Updated

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Dizzy Gillespie, Miles Davies, Frank Sinatra, Amy Winehouse, Michael Jackson, Dionne Warwick … the powerhouse producer made magical music with everyone who was anyone. We pay tribute to the genius of ‘the Dude’
The Guardian - UK
The Guardian - UK
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