Oil Leads Havens Higher After Iran Strikes Israel: Markets Wrap

Oil led a surge in haven assets after Iran fired a barrage of missiles at Israel, with the flight to safety sending US stocks lower on Tuesday.

Crude rose 1.5% in early Asia trading after gaining more than 2% on Tuesday, while bonds, gold and the US dollar also climbed following Tehran’s sharp but brief strike in reprisal for Israel’s attacks on Lebanon in recent days. The Israel Defense Forces said many of the missiles had been intercepted as Prime Minister Benjamin Netanyahu vowed to retaliate.

Stocks were set to decline in Tokyo while futures were little changed in Sydney after the S&P 500 slid 0.9%. US equity futures edged lower in early trading. Wall Street’s fear gauge — the VIX — spiked higher on Tuesday, touching a key level that usually indicates more market swings are in store. 

“Markets are in wait and see mode,” said Kathleen Brooks, research director at XTB. “The next 24 hours will be critical to see how far this situation escalates and whether the rush to safe havens was justified.”

If the conflict blows over, Brooks said she expect stocks and tech shares to recover. The tech sector was the session’s worst performer on Tuesday with Apple Inc. and Nvidia Corp. sinking around 3%. The Nasdaq 100 trimmed a more than 2% loss to a 1.4% drop in afternoon trading. 

A gauge of US-listed Chinese shares surged for a fourth day with markets in the Asian nation shut for Golden Week.

The Middle East conflict eclipsed the signals from Tuesday’s economic data. The US ISM price index fell by the most since May 2023, while US job openings rose in August to a three-month high, at odds with other readouts indicating slowing demand for workers. Treasury yields remained lower with the 10-year hovering around 3.73%.

The new data “should weigh down the 10-year yield, dollar, and employment service stocks, though the payroll release is more influential,” according to Evercore ISI’s Stan Shipley, alluding to Friday’s highly anticipated employment readout. “However, geopolitical stories out of the Mideast are more important for Treasury markets.” 

Investors will also get a chance to hear from vice presidential nominees JD Vance and Tim Walz in their sole debate of this election season in US afterhours. The would-be VPs are trying to win crucial swing voters in the lead up to November. 

Shares of Nike Inc. weakened in postmarket trading after the athleticwear maker reported quarterly revenue that missed estimates.

In money markets, swaps traders are wagering on a one-in-three chance the Fed will deliver another half-point cut in November, but that may not pan out as expected, Larry Fink warned.

“The amount of easing that’s in the forward curve is crazy,” Fink, the chief executive officer of BlackRock Inc., said in an interview with Bloomberg Television. “There’s room for easing more, but not as much as the forward curve would indicate.”

Elsewhere, Euro-area inflation slowed below the European Central Bank’s 2% target for the first time since 2021, prompting money markets to add to bets on another quarter-point decrease by the ECB this month. ECB President Christine Lagarde said the bank is growing more optimistic about reining in price pressures. 

Key events this week: 

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This story was produced with the assistance of Bloomberg Automation.

This article was generated from an automated news agency feed without modifications to text.