By Anna Hirtenstein and Joanne Chiu
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 0.2%, having earlier fallen as much as 1.7%. Futures linked
to the Nasdaq also rallied slightly.
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.
European stocks were flat, with the Stoxx Europe 600 and the
U.K.'s FTSE 100 both wavering less than 0.1%.
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 0.3% to $68.48 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 1.8017%, 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 0.3% higher at $1,579.50 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 1.6%, General
Dynamics rose 1% and Northrop Grumman advanced 1.3%.
Walgreens Boots Alliance Inc. dropped 4.2% premarket after
reporting its quarterly results. The pharmacy chain's earnings per
share fell 19.8% and its chief executive said it was a "soft first
Airline stocks declined in a predictable reaction to a rise in
oil prices. Air France declined 1.8% and Lufthansa slipped 0.4%.
International Consolidated Airlines Group, which owns British
Airways, slid 1%.
Boeing slipped 1.9% 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.
Shares in Finablr PLC declined 16% Wednesday after one of its
key businesses, foreign-currency-exchange chain Travelex, said it
was the victim of a ransomware attack that has hobbled its computer
networks. Two key shareholders, Saeed Al Qebaisi and Khaleefa Al
Muhairi, said they were selling $72 million of Finablr shares
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.
Write to Anna Hirtenstein at firstname.lastname@example.org and Joanne
Chiu at email@example.com
(END) Dow Jones Newswires
January 08, 2020 07:50 ET (12:50 GMT)
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