World Shares on Wednesday, May 9, failed to secure a strong rally as MSCI world equity index .MIWD00000PUS, which tracks shares in 47 countries, closed flat in percentage terms and continued to trade in a narrow range.
The pan-European STOXX 600 meanwhile rose 0.2 percent as oil majors gained and earnings from Siemens (SIEGn.DE) and Imperial Brands (IMB.L) dominated the market action.
“In the very short term, it looks as if the impact of heightened geopolitical worries was limited to oil markets. But that is not the end of the story,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“U.S. sanctions could affect various industries. And tensions between Iran and Israel look set to intensify. Those will begin to cap share prices,” he added.
The reaction in Asian markets was more pronounced as renewed U.S. sanctions on Tehran were seen as disruptive for many companies that have deals with Iran. Trump’s move is also seen as likely to worsen already-tense relations between Iran and U.S. allies in the region.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat, while Japan’s Nikkei .N225 fell 0.4 percent.
Iran, the third-biggest producer among the Organization of the Petroleum Exporting Countries, produces about 3.8 million barrels per day (bpd), or about 4 percent of the world’s oil supplies, Reuters reports.
The U.S. Treasury said it will reimpose a wide array of Iran-related sanctions after the expiry of 90- and 180-day wind-down periods, including those aimed at Iran’s oil sector and transactions with its central bank.
