War returns to Iran with Israel, US strikes

The Israeli military says it’s responding to “hostile aircraft infiltration” in northern Israel, reports Al Jazeera.

The European Central Bank is expected to hold interest rates steady again this week as it waits to see if the inflation spike triggered by the Middle East war will prove temporary or begin to weigh on growth, reports Reuters.

Inflation in the 21-nation single currency area jumped to 2.6 per cent in March, above the ECB’s two-percent target, and the bank has warned it could surge far higher in a worst-case scenario.

ING economist Carsten Brzeski said the ECB’s mantra before the war — that it was in a “good place” on rates — was “no more”.

“The bank is back in crisis mode, shifting its focus from longer-term projections to actual developments and back to a ‘driving at sight’ approach,” he said.

China’s yuan inched higher against the dollar, supported by a firm central bank fixing and the fastest growth in industrial profits in six months, even as Middle East tension kept investors on edge, reports Reuters.

The yuan was 0.03 per cent higher at 6.8289 to the dollar by 0231 GMT. Its offshore counterpart traded at 6.8285 yuan per dollar, up about 0.1pc in Asian trade.

Gold recouped early losses to trade largely steady, helped by a slightly softer dollar, while investors looked for progress on the stalled peace talks between the United States and Iran, reports Reuters.

Spot gold was steady at $4,707.75 per ounce, as of 0233 GMT, after shedding 0.8 per cent earlier in the session. Last week, the metal fell 2.5pc to snap a four-week winning streak.

US gold futures for June delivery fell 0.4pc to $4,720.50.

Lending support to bullion, the dollar eased after a report said that Iran through Pakistani mediators gave the US a new proposal on reopening the Strait of Hormuz and ending the war.

“We’re just sort of watching now whether there’s progress in the (US-Iran) talks at all in the coming days and that’s going to be the biggest driver for gold,” said Kyle Rodda, a senior financial market analyst at Capital.com.

Profits at China’s industrial firms grew at their quickest pace in half a year last month, adding to broader signs of an uneven economic recovery in the first quarter as policymakers brace for the impact of the Middle East war, Reuters reports.

The country’s export engine stuttered last month while retail sales and industrial output cooled, although producer prices emerged from a years-long deflationary stretch, a shift that analysts warn could leave companies boxed in by rising costs but limited pricing power as demand remains fragile.

“The data has likely not reflected the impact of the Iran war yet,” said Lynn Song, ING’s chief economist for Greater China, underscoring growing risks to growth at home and abroad from the conflict as governments and businesses scramble to soften the blow.

Maritime analytics firm TankerTrackers reports that Iran loaded the equivalent of 4.6 million barrels of oil at crude export terminals, according to Al Jazeera.

An additional 4m barrels of Iranian oil appear to have exfiltrated the US blockade line, it added.

US forces have directed 38 ships to turn around or return to port as the US blockade against Iranian ports continues, according to its Central Command (Centcom) on X.

A top Russian lawmaker has said that the US was “clearly unprepared” militarily for a war on Iran, because it relied on the “misguided belief” that force could quickly achieve results, Al Jazeera reports.

Alexey Pushkov, chairman of the information policy commission of Russia’s Federation Council, told the TASS news agency the US approach could have been influenced by its experience in Venezuela.

“The kidnapping of (Venezuelan President Nicolas) Maduro and the very, I would say, weak reaction to it from the Venezuelans … convinced (Trump) that a precise surgical military operation is a good tool for forcing a foreign regime to behave as the Americans please,” the senator said. “After this, Trump apparently decided that something similar could be done in Iran.”

Pushkov added that Iran, on the other hand, had prepared well for a conflict with the US, moving “virtually all of their missile facilities underground, where they are extremely difficult to reach” and building up a missile and drone arsenal numbering in the tens of thousands.

Oil prices have risen as peace talks between the US and Iran have stalled while shipments through the Strait of Hormuz remain limited, keeping global oil supplies tight.

Brent crude futures rose $2.22, or 2.11 per cent, to $107.55 a barrel by 22:02 GMT (3:02am PKT) and US West Texas Intermediate was at $96.42 a barrel, up $2.02, or 2.14pc.

Gold has fallen today, pressured by a firm dollar, while higher oil prices have heightened fears of inflation and higher-for-longer interest rates as US-Iran peace talks remain stalled.

Spot gold was down 0.3 per cent at $4,694.26 per ounce, as of 00:59 GMT (5:59am PKT). US gold futures for June delivery fell 0.9pc to $4,697.60.

IRNA is reporting that the Iranian foreign minister has arrived in St Petersburg ahead of his talks with President Putin, according to Al Jazeera.

Iran through Pakistani mediators gave the US a new proposal on reopening of the Strait of Hormuz and the ending of the war, with nuclear negotiations postponed for a later stage, Axios has reported according to Reuters, citing a US official and two sources with knowledge of the matter.

Lebanon’s health ministry has said Israeli strikes on the country’s south has killed 14 people despite a ceasefire, reports AFP.

The number of killings was the highest since a ceasefire came into force over a week ago.

The ministry in a statement said the dead included two women and two children, adding that 37 other people were wounded.

UAE Deputy Prime Minister and Foreign Minister Abdullah bin Zayed Al Nahyan has discussed the Middle East conflict with US Secretary of State Marco Rubio in a telephonic call, Al Jazeera reports.

“The two sides reviewed the repercussions of the unprovoked and terrorist Iranian missile attacks targeting the UAE and a number of countries in the region, and their impact on international peace and security, energy supplies, maritime security, and global economic stability,” an Emirati statement said.

Abdullah also expressed his appreciation to the US for its full solidarity with the UAE.

The two officials “explored ways to achieve sustainable regional peace and security through strengthened collective action to address current challenges and support stability and prosperity in the region”.

US President Donald Trump has said that the cancellation of US representatives’ trip to Pakistan does not mean a return to hostilities with Iran, reports AFP.

“No, it doesn’t mean that. We haven’t thought about it yet,” he said.

Deputy Prime Minister and Foreign Minister Ishaq Dar says that the traffic restrictions around the Serena Hotel and the Red Zone in Islamabad have been lifted today.

In a social media post on X, FM Dar said, “The traffic restrictions around the Serena Hotel and the Red Zone in Islamabad have been lifted today.”

“I extend my heartfelt thanks to the people of Pakistan—especially the citizens of Islamabad and Rawalpindi—for their patience and cooperation.

“Your support has enabled us to ensure the safety of our guests and to continue our efforts for peace in the region,” he added.

FM Dar said that the government would remain committed to these goals and was grateful for, and sought, continued prayers and good wishes.

Egypt has lifted the energy-saving measures it introduced last month to deal with the effects of an energy crisis caused by the war on Iran, saying on Sunday that shops will no longer be required to shut at 11pm local time, reports Reuters.

Egypt “approved suspending the decision requiring shops, malls and restaurants to close at 11pm, with a return to previously applied normal operating hours,” the cabinet said in a statement.

US President Donald Trump has said he is not “overly disappointed” with China’s role in the Iran conflict, reports Anadolu Agency.

“I don’t think much. I think maybe helping, but I don’t think much they could,” Trump told Fox News on China’s involvement with the Iran war. “They could help a lot more. I’m not overly disappointed.”

He drew a parallel to US support for Ukraine, saying he did not consider China “very bad” given that Washington also assists other countries in conflicts.

Trump said he had halted US diplomatic travel for talks, telling Iran it could call or come to Washington instead. “We have all the cards,” he said, adding that the US is not sending representatives on an 18-hour journey to Pakistan when it held the stronger negotiating position.

“They know what has to be in the agreement. Very simple. They cannot have a nuclear weapon, otherwise there’s no reason to meet,” said Trump.

Jordan’s King Abdullah II has said that any potential agreement between the United States and Iran must guarantee the security of Arab countries, Al Jazeera reports.

Abdullah discussed with Kuwaiti Foreign Minister Jarrah Jaber al-Ahmad al-Sabah “the strong ties between the two countries and ways of expanding cooperation in several fields, and intensifying joint Arab action to sustain de-escalation in the region,” a royal court statement said.

The Jordanian monarch said any agreement to reduce tensions “must guarantee the security of Arab countries”.

“The security of the Gulf is fundamental to the security and stability of the region and the world,” said Abdullah.