Oil prices surged and global stock markets were subdued Wednesday after President Donald Trump said the United States will withdraw from a 2015 nuclear accord with Iran and re-impose sanctions.
KEEPING SCORE: Britain's FTSE 100 was up 0.4 percent to 7,598 and France's CAC 40 fell 0.1 percent to 5,515. Germany's DAX fell 0.1 percent to 12,897. Futures augured gains on Wall Street with Dow and S&P futures both rising 0.4 percent.
IRAN DEAL: The U.S. decision to leave the Iran nuclear deal, which required Iran to curb its nuclear enrichment program in exchange for relief from international sanctions, will be followed by a restoration of harsh sanctions aimed at limiting Iran's ability to sell oil or conduct other overseas business. Now Iran, the world's fifth-largest oil producer, will have to decide whether to follow the U.S. and withdraw or try to salvage what's left with the European countries. Supply constraints could push oil prices higher, as evident in an increase on Wednesday. That could hurt growth in net importing countries like Japan and Germany.
ANALYST'S TAKE: "Geopolitical risks are heightened especially if Iran retaliates, but it could wait and see if the deal is completely undone or if there is scope for it to continue without the U.S.," Mizuho Bank said in a daily commentary. With Germany, France and Britain saying they are committed to the accord, the European countries will "continue importing oil from Iran, albeit having to side-step the U.S. banking system for trade purposes," it said.
OIL: Prices of oil fell sharply before Trump's announcement but rebounded, with benchmark U.S. crude oil jumping $1.94, or 2.8 percent, to $71.00 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.67, or 2.4 percent, to $69.06 per barrel on Tuesday. Brent crude, which is used to price international oils, gained $2.01, or 2.7 percent, to $76.86 per barrel in London. It lost $1.32, or 1.7 percent, to close at $74.85 per barrel on Tuesday.
ASIA'S DAY: Japan's Nikkei 225 dropped 0.4 percent to 22,408.88 and South Korea's Kospi retreated 0.2 percent to 2,443.98. Hong Kong's Hang Seng index added 0.4 percent to 30,536.14 while the Shanghai Composite Index dipped 0.1 percent to 3,159.15. Australia's S&P/ASX 200 added 0.3 percent to 6,108.00. Stocks rose in Taiwan, Singapore and Indonesia but fell in Thailand and the Philippines.
CURRENCIES: The dollar rose to 109.65 yen from 109.13 yen while the euro fell to $1.1877 from $1.1864.