News related to
Iran war

China’s economy expanded faster than expected in the first quarter, giving Beijing a firmer platform as it confronts the fallout from the war involving Iran, but the details beneath the headline number pointed to a recovery still leaning heavily on industry and exports while households remain cautious. Official data released on Thursday showed gross domestic product grew 5.0% from a year earlier in January to March, above the 4.8% forecast in a Reuters poll and up from 4.5% in the final quarter of 2025. Quarterly growth came in at 1.3%, slightly ahead of the previous quarter.

The stronger reading suggested that the first shockwaves from the conflict in the Middle East have not yet knocked China off course. Markets took the figures as a sign of resilience. Mainland share indices rose after the release and the yuan held near its strongest levels in three years, reflecting confidence that the world’s second-largest economy has, for now, absorbed higher energy risks better than some had feared.

Yet the composition of growth was less reassuring. March industrial output rose 5.7% from a year earlier, beating expectations, but retail sales slowed to 1.7%, well below forecasts and down from 2.8% in the first two months of the year. Fixed-asset investment in the first quarter rose 1.7%, also missing expectations, while property investment fell 11.2%. Those figures reinforced a pattern that has defined China’s economy for months: factories, infrastructure and technology manufacturing are carrying more of the load than domestic consumption or housing.

That imbalance matters because Beijing has repeatedly signalled that stronger household demand is essential to putting growth on a steadier footing. Economists cited in the reporting on Thursday said the first-quarter strength was driven largely by momentum built in January and February, especially through exports and industrial activity, while March showed signs of softer conditions. The slowdown in shop spending is particularly sensitive because consumer confidence has remained fragile even as policymakers talk up support for incomes, jobs and services-led demand.

The war has complicated that task without yet derailing it. Since hostilities erupted on 28 February, China has faced a familiar vulnerability: it is the world’s largest energy importer and still relies on stable global shipping and manageable oil prices to protect factory margins and household purchasing power. Reuters reported that economists believe China has so far weathered the shock because of large oil reserves, a diversified energy mix and price controls, but they also warned that persistently higher oil costs are beginning to filter through supply chains and squeeze profits.

Evidence of that pressure is already visible. Reuters noted this week that factory-gate prices in March rose for the first time in more than three years, a signal that energy-driven cost increases are feeding into production. Export growth, which had been one of the brighter spots, also lost momentum in March after a very strong start to the year, raising the possibility that manufacturers will find it harder to sustain their pace if shipping costs stay elevated and overseas demand weakens.

Beijing’s response is likely to stay measured unless the conflict worsens. Policymakers have already set a budget deficit of about 4% of GDP for 2026 and planned heavy bond issuance to support activity. Analysts polled by Reuters expect the central bank to keep the one-year loan prime rate steady through the year, with only a modest cut to reserve requirements anticipated later on. A stronger first quarter gives officials more room to avoid large-scale stimulus at this month’s Politburo meeting, though that calculus could change if oil prices climb further or exports weaken more sharply.

The broader international backdrop is not especially forgiving. The IMF said in its April World Economic Outlook material that the Middle East conflict is lowering growth expectations for advanced economies in 2026, even if the aggregate effect is described as modest. For China, that matters less through direct battlefield exposure than through energy costs, shipping uncertainty and the health of major overseas markets. A prolonged conflict would test the durability of China’s export-led strength at the same time as its consumer recovery remains incomplete.

Malaysia is positioning itself as a discreet diplomatic channel between Gulf capitals and Tehran, with Prime Minister Anwar Ibrahim saying leaders from the Arab world have asked Kuala Lumpur to convey their concerns to Iran’s leadership as governments search for ways to contain the Middle East conflict. Anwar made the remarks in Putrajaya on 16 April during a joint appearance with Australian Prime Minister Anthony Albanese, adding a new dimension to Malaysia’s response after it had already secured passage for its vessels through the Strait of Hormuz through direct engagement with Tehran.

The comments suggest Malaysia sees room to act beyond its traditional Southeast Asian brief at a moment when the war-linked shock in the Gulf is reverberating through energy markets, shipping lanes and food supply chains far beyond the region. Anwar’s statement also points to how some Gulf states may be looking for intermediaries that maintain workable ties with Iran while still being able to speak with a broader range of governments. Malaysia has presented itself as a neutral actor, and Anwar has argued that any contact with Tehran should be aimed at de-escalation rather than tactical positioning inside the conflict.

His remarks fit into a chronology that has been building for weeks. On 26 March, Anwar said Iran had agreed to allow Malaysian-flagged vessels to pass through the Strait of Hormuz after he held talks with leaders from Iran, Egypt, Turkey and other regional states. He thanked Iran’s president for facilitating the release of Malaysian oil tankers and their crews, while also acknowledging that Tehran remained wary because of what he described as broken assurances and the lack of firm security guarantees.

That earlier intervention mattered because the Strait has become one of the most sensitive pressure points in the wider confrontation. Iran’s restrictions and the broader conflict have disrupted oil and gas shipments, pushed governments to seek alternative supply arrangements and revived fears over the security of one of the world’s most important maritime corridors. ASEAN foreign ministers, in a virtual meeting on 13 April, urged the United States and Iran to sustain negotiations toward a permanent resolution and called for the restoration of safe and continuous navigation for vessels and aircraft through the Hormuz corridor.

Malaysia’s diplomatic posture is being shaped as much by economic exposure as by political calculation. Reuters reported this week that Kuala Lumpur and Canberra agreed to strengthen energy and trade ties in response to disruption caused by the Middle East conflict, with Anwar saying Petronas would prioritise supplying Australia with excess fuel. That followed reporting on Albanese’s 14-17 April visit to Brunei and Malaysia, where fuel security and fertiliser supply were central themes as Canberra sought to cushion the impact of the Hormuz disruption.

For Malaysia, that means diplomacy cannot be separated from domestic cost pressures. The government has already had to manage the implications of tighter oil and gas supplies, and Anwar said in March that while fuel subsidies would stay, Putrajaya would move to reduce subsidised fuel allocations to contain the fiscal strain. The message was that Malaysia’s outreach to Tehran is not only about foreign policy profile; it is also about protecting shipping, energy flows and household stability at home.

The broader regional setting helps explain why Gulf states might see value in using a country such as Malaysia as a messenger. Several governments in the Gulf are recalibrating how they deal with Tehran after the conflict exposed both their vulnerability to retaliation and the limits of outside security guarantees. At the same time, alternative mediators are emerging. Pakistan’s army chief was in Tehran on 16 April for talks linked to possible new US-Iran negotiations, underscoring how middle powers across Asia are trying to create off-ramps before the ceasefire window narrows further.

Malaysia is unlikely to become a formal broker on its own, and Anwar has not claimed such a mandate. What he has done is signal that Kuala Lumpur is already part of a live diplomatic relay, trusted by some Arab leaders to transmit messages to Tehran and willing to use that access in support of a political settlement. That role may suit all sides precisely because it is informal, low-key and tied to a country that has avoided the sharper alignments defining the conflict.

The rally reflected a market view that the worst-case economic fallout from the conflict may yet be avoided if negotiations regain momentum. Investors were encouraged by signs that talks between Washington and Tehran could resume after earlier efforts faltered, easing some fears over energy supply disruptions and allowing attention to swing back to earnings, economic data and the resilience of household demand in the United States and Asia. That shift in mood helped lift US stock futures and underpinned broader gains from Tokyo to Mumbai.

Japan led the advance, with exporters and technology names benefiting from stronger risk appetite and the market’s belief that any easing in Middle East tensions could reduce pressure on fuel costs and shipping. The Nikkei’s record level also reflected investor confidence that large Japanese companies remain well placed to benefit from global demand for semiconductors, automation and artificial intelligence infrastructure. Elsewhere, South Korean and Hong Kong shares also moved higher, while mainland Chinese markets were supported by data showing the economy expanded by 5.0 per cent in the first quarter, beating expectations and offering some reassurance that domestic activity has retained momentum despite the geopolitical shock.

Wall Street’s lead mattered. The S&P 500 closed at 7,022.95 on Wednesday, a record that marked a full recovery from losses triggered after the conflict began in late February, while the Nasdaq posted another record finish and extended a powerful winning streak. Strong results from major banks, including Bank of America and Morgan Stanley, reinforced the idea that corporate America is entering the earnings season on firmer footing than many investors had feared when oil prices spiked and risk assets sold off. Reuters reported that 84 per cent of companies that had reported by then had beaten expectations, helping to steady nerves about margins and consumer activity.

The earnings story is now sharing the stage with geopolitics. Markets are effectively pricing a narrower range of negative outcomes than they were only weeks ago, but that optimism remains conditional. Oil prices, while off their most alarming levels, are still elevated by historical standards, and every diplomatic headline continues to carry outsized weight because the Strait of Hormuz remains central to global crude flows. Reports that Iran may allow shipping through the waterway helped calm traders, though supply risks have not disappeared, especially with refinery disruptions in Australia and the threat of fresh sanctions or military miscalculation still present.

That tension between relief and caution is visible across asset classes. The dollar was broadly steady, the euro stayed firm, gold edged up and cryptocurrencies drifted lower, all signs that investors have not fully abandoned hedges even as they add exposure to equities. In India, shares opened higher as lower oil prices and hopes of renewed dialogue supported all major sectors, with the Nifty 50 and Sensex building on gains from the previous session. For economies that import large volumes of energy, any sustained cooling in crude would ease inflation pressure, support currencies and give central banks more room to focus on domestic growth rather than external shocks.

Technology remains a central pillar of the market’s confidence. Taiwan Semiconductor Manufacturing Co. was in focus ahead of results that investors expected to show a sharp profit jump, driven by demand tied to artificial intelligence chips. That anticipation has fed into a broader belief that the AI investment cycle can continue to offset weakness elsewhere in the global economy. Yet the strength of that narrative also creates a vulnerability: richly valued technology shares leave little room for disappointment, and any sign of slowing orders or tighter capital spending could quickly change the market tone.

Pressure on the economy is already visible in trade and commodity data. Merchandise trade with the Middle East has been hit by shipping disruption linked to the conflict, even as stronger exports to the United States helped keep March’s overall trade deficit lower than expected. At the same time, the fertiliser bill has jumped sharply: urea import offers to Indian Potash Ltd clustered near $1,000 a tonne this week, roughly double the level seen two months ago, raising the prospect of a larger subsidy burden just as the kharif cycle approaches. For policymakers, that combination matters because it hits both external accounts and domestic costs, especially in food production.

Energy remains the central fault line. The Strait of Hormuz handles about a fifth of global oil and gas shipments, and for India it is a vital corridor for roughly half of crude and LPG imports. That vulnerability has been laid bare by delays to vessel movements and the stranding of India-flagged ships in the Gulf. Iran’s envoy in New Delhi has denied any toll demand on tankers, and India has also said no such payments were made, but the broader message from the episode is that the route can no longer be treated as a routine artery for commerce when conflict risk is this high.

Oil traders have taken some comfort from ceasefire diplomacy and indirect talks between Washington and Tehran, yet prices remain elevated because markets do not believe a durable fix is close. Brent crude was still around $95 a barrel on April 16, and analysts say disruptions to flows through Hormuz remain severe. That leaves New Delhi facing a familiar but uncomfortable calculation: protect households from a fuel shock and risk wider fiscal stress, or let higher import costs work their way through the system and accept stronger inflation. The International Monetary Fund and World Bank have both warned that the conflict could scar global growth, raise prices and impose lasting damage even if the battlefield quietens.

Those warnings matter because the shock is broader than petrol and diesel. Wholesale prices are already climbing, and manufacturers are absorbing costlier freight, energy and feedstock. Fertiliser is a particular worry. If elevated urea prices persist, the state may have to spend more to shield farmers, while any squeeze on supply would carry risks for sowing costs and food inflation later in the year. Economists have argued for targeted support rather than broad subsidies, but that is easier said than done in a country where energy and fertiliser costs have immediate political as well as economic consequences.

There are, however, offsets that could soften the blow. March trade numbers showed that stronger shipments to the United States helped compensate for weaker business with the Middle East, and India continues to diversify its energy basket through Russian supplies and other alternatives where pricing works in its favour. A sanctioned LNG cargo from Russia is heading to Dahej, underlining the government’s willingness to prioritise supply security and consumer interests over diplomatic noise around purchasing patterns. That flexibility has given India more room than many pure importers, though it does not erase the strategic dependence on Gulf routes.

By Nitya Chakraborty President Donald Trump as usual has been talking in conflicting voices on his immediate stand on Iran war. The U.S. President ordered naval blockade of Iranian ports after the failure of the Islamabad peace talks on Sunday but on Tuesday, he indicated that another round of talks would be held in the […]

The article Trump Can’t Afford Escalation Of US War With Iran At The Moment appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

China is set to issue 15.5 billion yuan in sovereign bonds in Hong Kong on 22 April, marking its largest offshore yuan government bond sale in the city since 2023 and adding to the pool of renminbi assets available to global investors at a time when geopolitical strain and inflation fears have unsettled many other markets. The Ministry of Finance disclosed the plan on 15 April, with detailed tender arrangements to be published through Hong Kong’s Central Moneymarkets Unit.

The move comes as China’s bond market has drawn fresh attention from overseas investors looking for relative stability. Foreign investors put about $2.5 billion into Chinese debt in March, while other emerging markets as a group suffered roughly $16.7 billion of outflows, according to Reuters data. That divergence has sharpened interest in yuan assets, helped by lower inflation in China, a still-supportive monetary stance and a yield curve that has behaved differently from those in the United States and Europe.

For Hong Kong, the planned sale also reinforces its role as the main offshore centre for renminbi financing. Regular sovereign issuance from Beijing has long been used to deepen the city’s yuan liquidity pool, extend the offshore yield curve and provide benchmark pricing for other issuers. Hong Kong authorities have made expansion of the offshore renminbi ecosystem a policy priority, linking bond issuance with broader efforts to promote cross-border settlement, trading and investment products tied to the Chinese currency.

Beijing has already tapped the Hong Kong market once this year. In February, the Ministry of Finance sold 14 billion yuan of sovereign bonds in the city, split across two-year, three-year, five-year, 10-year and 30-year maturities, with the offering drawing nearly four times subscription. That strong demand provided an early signal that institutional investors still had appetite for Chinese sovereign paper despite uncertainty over domestic growth and external trade conditions. The new 15.5 billion yuan deal will exceed that February size and also top the 12.5 billion yuan tranche sold in Hong Kong in April 2025.

Timing is central to the significance of the sale. Global investors have been reassessing where to park money as the war involving Iran has pushed up oil prices, clouded the inflation outlook and stirred volatility across currencies and bonds. The International Monetary Fund warned this week that the conflict is raising broader financial stability risks, especially if funding conditions tighten or inflation expectations become more entrenched. Against that backdrop, China’s comparatively subdued inflation and its ability to avoid the kind of aggressive rate response seen elsewhere have made its debt market look more defensive than many peers.

That does not mean investors are ignoring the risks. China remains a large energy importer, and any sustained period of high oil prices could feed through into producer costs, growth expectations and longer-dated bond yields. Reuters reported that investors have favoured short- and medium-dated Chinese bonds more than the long end, even as demand for the asset class has improved. There are also broader questions around China’s economy, including softer credit demand, pressure on exports from weaker global activity and the continuing need for fiscal support. March bank lending rose from February levels but still missed expectations, highlighting the uneven nature of the recovery.

The bond sale also fits within a wider fiscal picture. China’s 2026 budget includes 1.3 trillion yuan of ultra-long special treasury bond issuance, matching the previous year, and the Finance Ministry is due to brief underwriters on the broader government borrowing plan. Investors have been closely watching how Beijing balances support for growth with concerns about duration risk and market absorption, especially after expectations of a smaller allocation of 30-year special bonds helped pull those yields lower.

For Hong Kong’s market, a larger sovereign bond sale offers both symbolism and practical benefits. Sovereign paper from Beijing serves as a high-grade reference point for pricing dim sum bonds and other offshore renminbi instruments, while also supporting repo activity and secondary-market development. The more frequently and predictably such bonds are issued, the easier it becomes for asset managers, banks and reserve holders to build yuan exposure outside the mainland. Hong Kong officials have repeatedly framed that process as essential to strengthening the city’s function in renminbi internationalisation.

The slowdown matters because overseas sales have been doing much of the heavy lifting for China while the property downturn and soft household spending continue to restrain growth at home. Economists surveyed by Reuters expect the economy to have expanded 4.8 per cent in the first quarter, up from 4.5 per cent in the previous three months, but they also see the outlook dimming as the Middle East conflict pushes up input costs and clouds demand in key markets.

March’s figures suggest that what had looked like a strong start to the year is becoming harder to sustain. Earlier gains had been supported by front-loaded shipments, strong demand for artificial intelligence-linked electronics and a rebound in some advanced manufacturing exports. That mix is now facing a harsher external backdrop. The conflict involving Iran has disturbed energy markets, with the Strait of Hormuz under severe strain and oil prices climbing towards the $100 a barrel mark, a level that raises transport, production and logistics costs across Asia and Europe.

Imports into China, by contrast, jumped 27.8 per cent in March, the strongest increase since late 2021. Part of that rise reflected demand tied to semiconductors, components and technology supply chains, but it also pointed to stockpiling and shifting trade flows as businesses prepared for a more volatile energy and freight environment. The divergence between softer export growth and surging imports may complicate Beijing’s effort to keep its large trade surplus intact through 2026.

Pressure from the Iran conflict is being transmitted through more than one channel. China remains heavily exposed to imported energy, and although it has reserves and a diversified supply base, higher crude and gas costs squeeze manufacturers’ margins and can erode the price competitiveness that has underpinned the country’s export machine. Reuters reported that March also brought the first rise in factory-gate prices in more than three years, indicating that cost pressures are building just as external demand becomes less predictable.

There are also direct trade effects. Reuters reported that crude and natural gas imports fell as the regional conflict disrupted flows. OPEC, in its first formal assessment of the war’s economic effect, cut its forecast for second-quarter global oil demand by 500,000 barrels a day, saying the conflict had become a meaningful drag on consumption and trade. For export-oriented economies such as China, that points to a tougher environment in which customers abroad may curb discretionary spending while producers face steeper energy bills.

Yet the picture is not uniformly bleak. China’s technology and clean-energy manufacturers still have areas of strength that could cushion the blow. Overseas demand for electric vehicles, batteries and solar equipment has been supported by the same oil shock that is hurting traditional exporters. Associated Press reported that Chinese new-energy vehicle exports continued to surge in March, while another AP analysis said the energy crisis was sharpening global interest in Chinese clean-tech supply chains. Those sectors are unlikely to offset every weakness, but they do show that the country’s export story is becoming more uneven rather than simply weaker across the board.

That unevenness is visible across product categories. Lower-value consumer goods such as clothing, furniture and other labour-intensive shipments were hit by seasonal factors and softer foreign demand, while higher-end electrical and AI-linked exports remained more resilient. South Korea’s sharp rise in exports to China, driven by chip demand, underlined the point that advanced technology supply chains are still expanding even as broader goods trade loses pace.

Beijing now faces a familiar policy dilemma made more acute by war. It wants to preserve growth without adding excessive leverage, support exporters without worsening trade tensions, and stabilise domestic demand while avoiding another debt-fuelled property cycle. Current forecasts still place full-year growth within the official 4.5 to 5 per cent target range, but many analysts now expect a weaker second quarter than they did before the Iran crisis deepened. Fiscal support, bond issuance and selective easing remain on the table, though officials appear cautious about deploying a large stimulus immediately.

By Nantoo Banerjee The country is experiencing a significant surge in commodity and transportation costs following geopolitical tensions in the Persian Gulf region and a weak Indian Rupee. Retail prices of daily essentials are rising rapidly. The prices of edible oils, pulses and packaged foods, including drinking water, have moved up since last month. Precious […]

The article Prices Are Fast Shooting Up Fanning Inflation appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).