Happy Thursday and welcome to your morning wrap of the key international headlines from overnight.
We begin in the Middle East, where the fragile ceasefire appears to be under threat as Israel expands its strike against Lebanon, prompting Iran to close the Strait of Hormuz again, Associated Press reported.
The United States has demanded that Tehran reopen the strait, which it closed after Israeli strikes targeted several commercial and residential areas in central Beirut, killing at least 112 people and wounding hundreds of others.
The US and Iran agreed to a two-week conditional ceasefire yesterday, which included a temporary reopening of the strait.
Israeli Prime Minister Benjamin Netanyahu said earlier that the ceasefire did not cover fighting with Hezbollah in Lebanon, contradicting what Pakistan, the deal’s broker, has said.
Iran’s foreign minister, Abbas Araghchi, said in a post on social media that Israel’s war with Lebanon must end, and insists it is part of the agreement. “The world sees the massacres in Lebanon,” he said in a post on X. “The ball is in the US court, and the world is watching whether it will act on its commitments.”
Even before the strait was closed again, there was plenty of uncertainty and confusion in the maritime industry over the truce, stemming in part from Tehran’s caveat that passage through the narrow channel was only possible with approval from Iran’s armed forces, CNBC reported.
The potential for Iran to toll ships is another concern, with the Financial Times reporting that Tehran is planning to demand shipping firms pay levies in cryptocurrency to let their oil tankers through the strait.
The Strait of Hormuz is a narrow channel through which about 20% of global oil flows.
Despite the pressure placed on the ceasefire, financial markets reacted strongly overnight to its announcement yesterday.
Wall Street’s key indices, the Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq, were all up 2.56%, 2.26% and 2.61%, respectively, in late trading, as the price of Brent crude fell 13% to $94.92 per barrel.
Lipow Oil Associates founder Andrew Lipow told Reuters that oil prices had tumbled in anticipation of the strait reopening. "Overall, the market is hopeful more oil is going to reach the market ... but it is still concerned that it is a very fragile ceasefire and it may not last," he said.
US Treasury yields have also fallen sharply, while gold and Bitcoin have both perked up.
In business news, the owner of Facebook, Meta Platforms, has unveiled its first artificial intelligence model from a costly team it assembled last year to keep pace with rivals in the AI race, Reuters reported.
Named Muse Spark, the model is the first to come out of Meta’s superintelligence team, which it has spent billions of dollars on developing.
The model is the first in a new series and is part of a family known internally as Avocado. Muse Spark will initially only be available on the lightly used Meta AI app, and in the coming weeks, it will replace the existing Llama models powering chatbots on WhatsApp, Instagram, Facebook and Meta’s collection of smart glasses.
US tech giants are under massive pressure to prove their massive investment in AI will pay off. The stakes are even higher for Meta after it hired Scale AI boss Alex Wang last year under a US$14.3b deal and offered some engineers pay packages of hundreds of millions of dollars.
Meta chief executive Mark Zuckerberg.
Staying with business, Federal Reserve officials at their March meeting still expected to lower interest rates this year, even amid the uncertainty from the Iran war, according to meeting minutes that were released overnight.
As CNBC reported, most participants said the war could result in the need for loose monetary policy if rising gas prices hit the labour market and consumer spending.
Policymakers said they would need to remain “nimble” to the impacts of the war on inflation, which is above the Fed’s target range.
“Many participants judged that, in time, it would likely become appropriate to lower the target range for the federal funds rate if inflation were to decline in line with their expectations,” the minutes said.
The majority of members anticipated a cut to interest rates at the end of the year, which was unchanged from their last update.
Finally, many have long complained about the fees they are charged for legal services, but few ever do anything about it.
Enter Alberto Safra, the billionaire son of Joseph Safra, who was once dubbed the world’s richest banker.
Safra has won a review of more than US$35 million in legal fees he was charged by top-tier US legal firm WilmerHale, in a ruling that lays bare the rates charged by Big Law, the Financial Times reported.
In a judgment published overnight, London’s High Court granted Alberto a full assessment of WilmerHale’s costs, which ran to more than US$162,000 on a single day in 2023.
Safra had engaged WilmerHale in 2022 to represent him in a multibillion-dollar estate feud involving his inheritance. Partners at the firm, who charged $2100 per hour, recorded working between 12 and 17 hours per day.
“I have not previously encountered a case in which such levels of costs accrued with such limited information being provided to the client,” Costs Judge Colum Charles Leonard said in his ruling. “The defendant’s charges are extremely high, and well outside any ‘run of the mill’ case.”
WilmerHale did not immediately respond to the FT's request for comment.
