(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

March 19 -

What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

The energy shock has kicked up a notch, with Brent crude rising

above $115 a barrel this morning. Prices started shooting up on

Wednesday after Israel targeted Iran's South Pars natural gas

field - the largest in the world - sparking retaliatory attacks

by Tehran on gas facilities throughout the region, including

against Qatar's Ras Laffan energy complex.

Meanwhile, markets read Wednesday's Federal Reserve's policy

decision as hawkish even as it kept rates on hold. Chair Jerome

Powell acknowledged the war had injected considerable

uncertainty as the Fed lifted its full-year inflation forecast,

with futures markets now no longer priced for a rate cut in

2026. Powell's sentiment is likely to be echoed in the

communications of the other central banks meeting today.

I'll get into that and more below.

But first, check out my latest column on what global investors

should do amid the Iran conflict - and the factors potentially

beyond their control.

And listen to today's episode of the Morning Bid podcast, where

I discuss how the latest energy ructions in the Middle East are

testing central banks. Subscribe to hear Reuters journalists

discuss the biggest news in markets and finance seven days a

week.

GAS FIELD GRIEF

Energy prices surged on the latest escalation in the Gulf. Not

only has crude jumped, but European gas prices also soared by

around 25%. WTI continues to trade at a wide discount to Brent,

partly due to the releases from U.S. strategic reserves, with

the U.S. benchmark now around $97 a barrel.

Stocks tumbled around the world on Wednesday as traders digested

the latest oil price spike and hawkish signals from central

banks. All major U.S. indexes closed down more than 1% after the

Federal Reserve held rates steady and projected only a single

rate cut for the year.

The Bank of Canada and Bank of Japan also stayed put, with both

signalling willingness to raise rates if higher energy prices

led to elevated inflation. For the U.S., the energy shock comes

as inflation already looks to be running hotter, with producer

prices rising by the most in seven months in February - 3.4% -

well above consensus forecasts.

The dollar firmed on the Fed's hawkish signals while the yen

wilted, approaching its weakest level in two years. Meantime,

gold fell on the stronger dollar, touching its lowest level

since February 6.

The mood in equities was dour early on Thursday too, with Asian

stocks falling on soaring oil prices. Japan's Nikkei shed more

than 3% and South Korea's KOSPI fell by 2.8%, while European

stocks were also down. Wall Street futures were up slightly

ahead of the bell, however.

Further interest rate decisions will come later today from the

European Central Bank and Bank of England, which find themselves

in the same watch-and-wait boat on the Iran war's economic

impacts. As Fed Chair Jerome Powell put it on Wednesday, nobody

really knows "how big this will be and how long it lasts".

That's especially true as the parameters of the conflict remain

up in the air, with the Trump administration reportedly weighing

deploying ground troops to the Middle East, according to a

Reuters exclusive.

Away from geopolitics, the AI boom kept humming as Micron

Technology posted a sharp second-quarter revenue jump on strong

demand for AI memory chips and forecast third-quarter revenue

above expectations. Still, its shares dropped 5% after hours as

it flagged a $5 billion capex increase for 2026 - spending that

investors remain uneasy about.

Chart of the day

Natural gas prices soared again on Thursday amid the

tit-for-tat gas field attacks in the Middle East, with European

benchmark natural gas prices now up 107% since late February.

Today's events to watch

* European Central Bank interest rate decision (9:15 AM

EDT), Bank of England interest rate decision (8:00 AM EDT)

* U.S. weekly jobless claims (8:30 AM EDT), Philadelphia Fed

March business surveys (8:30 AM EDT)

* U.S. 10-year TIPS auction (1:00 PM EDT)

* U.S. corporate earnings: Accenture, FedEx

* Japanese Prime Minister Sanae Takaichi meets with U.S.

President Donald Trump

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Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.