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Today, global stock markets plunge again as the Middle East crisis intensifies.
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Plus, oil and gas prices continue to climb under disrupted supplies.
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And President Trump's shipping and insurance protections offer only partial relief.
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This is Reuters Morning Bid bringing you unfiltered market news and analysis
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straight from the Reuters newsroom seven days a week. I'm Anna Shemansky in London.
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And I'm Mike Dolan. It's Wednesday, March 4th.
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Well, it's a new day, but it's the same story.
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The Middle East conflict shows no signs of abating and markets are responding pretty dramatically.
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What are we seeing? Yeah, day four and little or no sign of this de-escalating
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anytime soon, I think. And there's a lot of hopes in the market that recent
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conflicts like this seem to dissipate very quickly when a few days. That doesn't seem to be the case.
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Energy price still climbing, but the Asian markets today particularly got a battering.
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The best performing market of the year by some distance is plummeting.
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South Korea's Caspi, which is its benchmark stock index, fell 12% today.
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It's the biggest one they decline ever.
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And that has to do both with a risk of sentiment, also the fact that Korea's obviously a
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net energy importer. Yeah, I think a lot of the Asian markets are particularly exposed to
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energy, big energy importers, Japan, China, and Korea, and big manufacturing bases as well,
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not least in the in the tech space, obviously. And their energy needs clearly now are
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more expensive, and there's a risk of that supply disruption lasting a long time.
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So a lot of great degree of nervousness, but I think the other factor of course is that
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the markets that we're doing is so well prior to this are the ones which are as you'd expect
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suffering most. And I think maybe as portfolios and mixed portfolios around the world go back to
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some more neutral settings and even some building cash, then clearly these are the markets that are
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going to get affected most. And then Japan, the Nikkei, which was down almost 4% today,
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was also one of the best performing markets of 26 so far.
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Well, some of the other best performing assets early this year were obviously precious metals.
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And gold has not performed exactly as one would have anticipated.
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This is a really peculiar story, right? You would have thought the classic safe haven is gold,
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that's kind of what people were buying, it's almost doubled over the past 12 months.
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And suddenly you get the crisis that most people would think would send gold surging,
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and yesterday at least fell about 4% to 5% and silver down 10% or more.
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Now they stabilize a little bit today, it has to be said, but it is peculiar as to why this
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hasn't happened. And there are a number of reasons. One is exactly the point we were discussing,
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one of the best performing markets gets sold up. There has also been a big jump in the dollar.
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And I think that is related to things. A search for liquidity and liquidity in the sense of
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just dollar cash around the world, if there is a need for being able to transact
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without having physical holdings of anything, then dollar cash is kind of the default place to go.
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And there's also the idea that the United States, of course, relatively speaking is less
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affected than other economies in Asia or in Europe from a protracted energy squeeze.
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And so I'm going back to energy prices. Obviously they have risen, but given the scale of the
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conflict, everything we're seeing, they haven't actually risen that much. And that really does speak
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to the fact that the US is, while the biggest energy consumer, they're also the biggest energy
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producer. Yeah, so that's the whole jam and that's changed geopolitics in itself over the
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recent years, the very fact that the US is almost self-sufficient in energy, certainly in petroleum
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products to net exporter in liquid natural, in a liquefied natural gas, it's also a net exporter.
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And I think after the Ukraine more, or the Korean invasion four years ago, the US clearly
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becomes a very important exporter for many regions, not least Europe. So there's also
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sort of factors at play there, but I think also brings us to the other development overnight,
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which is President Trump's attempt to kind of calm the energy market, or at least calm the
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supply disruption by offering the possibility of shipping insurance that is difficult to come by
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right now for obvious reasons. Going through obviously the straight-of-hormose.
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Yes, going through that particular narrow waterway that's now effectively blocked,
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and also holding out the possibility of US naval support for, for cornbys coming through that,
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which is not unprecedented. It happened, I think, shortly after 9-11 and also during the Iran
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Iraq war in the 1980s. So there is some precedent for that. But some of that might help
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Cam, US energy market as well to global, but it's really something that would take weeks to organize.
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Properly, I think most people feel that that is not a silver bullet by any stretch of the
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imagination, and also that speaks to the idea that the longer this squeeze lasts, the more problems
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and more damageable it will create. Yeah, 100%. It just seems like, well, yes, you have had an
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increase in oil prices. Given everything that's happening, given the scale of this, it's honestly
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quite surprising that oil prices haven't increased more than we've already seen, and going back to
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something you said earlier in this conversation, markets are used to these energy crises being
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resolved relatively quickly. Obviously, we have the ongoing conflict in Russia and Ukraine, but
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markets have adapted to that. And so it seems like that's being used as a model, but this situation
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seems quite different. And I think the big problem as well is that even if you could see over the horizon,
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some calming of situation in the Middle East, when you come up for air, look what's waiting for you.
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I mean, there's an awful lot of worry about the credit markets, private credit markets, again,
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this week, which has been rumbling for a few weeks, at least, if not months. And of course,
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the question marks over AI and all that disruption. So it's not exactly clear water when you
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And for today's recommended read, check out Mike's column,
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and when gold has failed to rally as the crisis has unfolded, the link is in the show notes.
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