Stocks Plunge on Iran Escalation; Gold, Oil Surge: Markets Wrap




 

(Bloomberg) -- U.S. stock futures slumped along with Asian equities and oil prices surged after Iran started an attack on military facilities in Iraq hosting American troops, escalating tensions in the Middle East. Treasuries and the yen rose as haven assets caught a bid.

Futures on the S&P 500 Index dropped more than 1.5% and benchmark U.S. Treasury yields tumbled 10 basis points. Iran fired several rockets at two joint U.S.-Iraqi bases early Wednesday morning in retaliation for the killing of a top Iranian military leader by the U.S. Japanese shares headed for the biggest slide since March, with equities also lower in Sydney and Seoul. Gold advanced.

"Markets will likely remain nervous," Mitul Kotecha, a strategist at TD Securities, said. "Much now depends on the U.S. reaction and whether there is further escalation."

Caution is returning to markets after a bumper 2019 for a range of asset classes amid signs hostilities are moving on to the next stage following the airstrike that killed General Qassem Soleimani last week. Meantime, investors continue to weigh developments on the trade front with the first phase of the U.S.-China trade deal expected by many to be signed on Jan. 15.

Here are some events to watch for this week:

Federal Reserve officials Richard Clarida, John Williams, James Bullard and Charles Evans speak on Thursday.The U.S. monthly employment report is due Friday.

These are moves in major markets:

Stocks

Futures on the S&P 500 Index slid 1.6% as of 9:37 a.m. in Tokyo. The underlying gauge fell 0.3% on Tuesday.Japan's Topix index lost 2.2%.Australia's S&P/ASX 200 Index was down 0.9%.South Korea's Kospi index fell 1.5%.

Currencies

The yen rose 0.7% to 107.71 per dollar.The offshore yuan traded at 6.9600 per dollar, down 0.3%.The Bloomberg Dollar Spot Index dipped 0.1%.The euro bought $1.1164, up 0.1%.

Bonds

The yield on 10-year Treasuries declined 10 basis points to 1.72%.Australia's 10-year yield fell about nine basis points to 1.13%.

Commodities

West Texas Intermediate crude jumped 4.4% to $65.46 a barrel.Gold rose 2% to $1,605.75 an ounce.

--With assistance from Cormac Mullen.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net;Chester Yung in Singapore at kyung33@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Andreea Papuc, Joanna Ossinger

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

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