By Joanne Chiu and Anna Hirtenstein
Tehran's military response to the U.S.'s killing of a key
Iranian general rattled markets, but the moves in stocks, bonds,
and commodities quickly moderated as investors reassessed the
chances of a broader conflict.
U.S. futures edged up, with securities tied to the S&P 500
gaining 0.1% after, having earlier fallen as much as 1.7%.
Late Tuesday, the Pentagon said Iran fired missiles at bases in
Iraq where U.S. troops are stationed. Iran's Islamic Revolutionary
Guard Corps said the attacks were in retaliation for the killing
last week of Maj. Gen. Qassem Soleimani.
Iran's foreign minister said the country had taken
"proportionate measures in self-defense" and didn't seek escalation
On Twitter, President Trump said "All is well!" adding,
"Assessment of casualties & damages taking place now. So far,
An administration official said there appeared to be no U.S.
casualties at either attack site, but that the assessment was in
its early stages.
Global stocks fell slightly, with the Stoxx Europe 600 and the
U.K.'s FTSE 100 both losing 0.2%.
Japan's Nikkei 225 closed 1.6% down after trading as much as
2.6% lower. Indexes in Hong Kong and South Korea both narrowed
losses to around 1%.
"Geopolitics become noise to markets until it becomes more
serious," said Kit Juckes, a macro strategist at Société Générale.
"This view is borne of experience -- history says that we avoid
Brent crude, the global oil benchmark, added 0.8% to $68.80 a
barrel, after spiking to as high as $71.75.
Suhail al-Mazroui, the energy minister of the United Arab
Emirates, said oil producers would respond to any supply shortages,
but that disruptions weren't likely and the option wasn't being
currently discussed by the Organization of the Petroleum Exporting
"We are not forecasting any shortage of supply unless there is a
catastrophic escalation, which we don't see," Mr. al-Mazroui
Rallies in government bonds and gold, two assets that tend to
gain in times of stress, lost steam. The yield on the benchmark
10-year Treasury note declined to as low as 1.708% before
recovering to trade at 1.803%, from 1.825% Tuesday. Yields fall as
"A flood to safe havens have really been reversed reasonably
quickly," said Philip Shaw, chief economist at Investec. "The
balance of market opinion is that this could be a one off and the
situation may well settle down."
Gold stood 0.6% higher at $1,583 an ounce, after briefly topping
$1,600 for the first time since April 2013.
Stefan Hofer, chief investment strategist at LGT Bank, said
higher oil prices could slow global growth.
"Rising oil prices is a tax on consumption," he said, adding
that investors should accumulate gold, partly as a hedge against
Despite the reversal in sentiment, defense companies in the U.S.
climbed in premarket trading. Lockheed Martin added 1.3%, General
Dynamics rose 1.9% and Northrop Grumman advanced 1.6%.
Airline stocks declined in a predictable reaction to a rise in
oil prices. Air France declined 1.8% and Lufthansa lost 1.9%.
International Consolidated Airlines Group, which owns British
Airways, slid 1.1%.
Boeing slipped 2.2% in premarket trading after one of its planes
operated by Ukrainian International Airlines crashed in Tehran on
Wednesday shortly after takeoff, killing all 176 passengers and
Iran's official state news agency said the crash was due to an
engine fire caused by a technical fault. It didn't explain how that
conclusion was reached.
Anglo American dropped as much as 2.6% after it said that it was
in advanced talks to buy Sirius Minerals, a U.K.-listed potash
fertilizer mining company. The target company's shares surged 35%
on the news.
Xie Yu contributed to this article.
Write to Joanne Chiu at email@example.com and Anna Hirtenstein
(END) Dow Jones Newswires
January 08, 2020 06:31 ET (11:31 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
From Jul 2020 to Aug 2020
From Aug 2019 to Aug 2020