Happy Wednesday and welcome to your morning wrap of the latest political and business headlines from around the world.
First up, US Defence Secretary Pete Hegseth says the ceasefire with Iran is not over after both sides exchanged fire in the Gulf, ABC reported.
Iranian drones and missiles targeted commercial and US Navy vessels, as well as targets in the United Arab Emirates, while the US said it has destroyed six small Iranian boats.
The renewed exchanges have tested the ceasefire between the US, Israel and Iran, with US General Dan Caine saying they are “below the threshold of restarting major combat operations”.
He accused Iran of firing at commercial vessels nine times and seizing two container ships since the truce was announced.
At a Pentagon briefing overnight, Hegseth said the Iranians were “embarrassed” that the US had escorted stranded tankers through the Strait of Hormuz. “They said they control the strait. They do not,” he said.
He also said, “The ceasefire is not over,” in response to a reporter's question.
Financial markets have responded favourably to Hegseth’s comments, as equities hit new records and the price of oil retreated.
The Strait of Hormuz is a narrow channel through which about 20% of global oil flows through.
On Wall Street, the tech-laden Nasdaq Composite gained 1% and hit a new all-time intraday high, while the broader S&P 500 and the Dow Jones Industrial Average rose 0.9% and 0.6%, respectively.
Adding to the momentum in equities was another batch of better-than-expected quarterly results, CNBC reported. Chemical and industrial products maker DuPont De Nemours shares gained 8% after it beat earnings and revenue expectations, as did the US-listed shares of Belgian brewer Anheuser-Busch InBev.
Palantir Technologies was a notable exception, as shares retreated 6% despite beating analysts’ expectations.
To date, roughly 85% of the S&P 500 companies that have reported have beaten expectations, according to FactSet data.
“We’ve seen just incredible earnings from not just the megacap tech but also the broad-based S&P500, or even the small-cap indices within the US,” Horizon Investments head of portfolio management Zachary Hill said in a note quoted by CNBC.
He added that when you couple this with the market’s belief that both the US and Iran “want some sort of resolution to this conflict”, that explains why the market is trading at all-time high levels.
Meanwhile, the price of oil has eased, with Brent crude down 4% to be back just below US$110 per barrel as of 6:40am NZT.
A report from the Financial Times notes global oil reserves plunged at a record pace in April, as the conflict in the Middle East strains supplies and raises the risk of a further sharp increase in prices.
Citing estimates from S&P Global Energy, it said crude stockpiles fell by nearly 200 million barrels, or 6 million barrels a day, even as higher prices caused the sharpest fall in demand since the Covid-19 pandemic.
“This is massive, it is far above the usual range,” S&P head of crude research Jim Burkhard told the FT, adding that in a normal month, global stocks only fluctuate by between a few hundred thousand and a million barrels. “An inevitable market reckoning is coming.”
While total reserves amount to about 4 billion barrels, Burkhard said, a large share of that is tied up in running day-to-day operations, such as keeping pipelines pressureised, limiting what can be drawn down.
The article also cited research from Goldman Sachs, which said that global oil stocks are now approaching their lowest level in eight years, with particularly large declines in Asia and Africa.
“The speed of depletion and supply losses in some regions and products is concerning,” Goldman Sachs researchers said.
Global oil stocks fell sharply over April.
In other news, the World Health Organization says there may have been a rare human-to-human transmission of hantavirus on the Dutch cruise ship where three passengers have died, the BBC reported.
The virus is usually spread from rodents, but the WHO said it could have spread among “really close contacts” aboard the MV Hondius vessel. It said the risk to the public was low.
Three people aboard the ship are due to be medically evacuated by aircraft to the Netherlands. Two of them are crew members, with the ship’s operator Oceanwide Expeditions saying they displayed “acute respiratory symptoms”.
The ship set sail from Argentina on its trip across the Atlantic Ocean about a month ago and is currently anchored near Cape Verde, off Africa’s west coast.
Medical teams have boarded the ship to help with suspected cases. Seven cases of hantavirus have so far been identified on the ship.
In Ukraine, Russian drone and missile strikes have killed at least 22 people and wounded 80 others, according to Ukrainian authorities.
Associated Press reports the attacks on three different cities came hours before Kyiv was due to enact a ceasefire and three days before Moscow promised to pause its own hostilities.
Ukrainian President Volodymyr Zelensky slammed Moscow for what he said was its “utter cynicism” in launching the attack after Russia announced a unilateral ceasefire over two days later this week while it marks the 81st anniversary of the defeat of Nazi Germany.
