Premarket: Stocks tumble, oil prices jump after Israel attacks Iran
World stock markets tumbled on Friday and oil prices surged as Israel launched a military strike on Iran, sparking a rush into safe havens such as gold, dollar and Swiss franc.
An escalation in the Middle East - a major oil-producing region - adds uncertainty to financial markets at a time of heightened pressure on the global economy from U.S. President Donald Trump's aggressive and erratic trade policies.
Market reaction was swift.
Crude oil jumped as much as 14 per cent at one point to almost US$79 a barrel, before pulling back to about US$74 - still up more than 5 per cent on the day and set for the biggest one-day jump since 2022. West Texas Intermediate futures rose more than US$5 to US$73.14.
Gold, a classic safe-haven at times of global uncertainty, rose to US$3,416 per ounce, bringing it close to the record high of $3,500.05 from April.
The rush to safety was matched by a dash out of risk assets. U.S. stock futures fell over 1.5 per cent, European shares dropped 1 per cent at the open and in Asia, major bourses in Japan, South Korea and Hong Kong fell over 1 per cent each.
'Clearly the big question is how far does this go?,' said Chris Scicluna, head of economic research at Daiwa Capital Markets in London, referring to the Middle East tension.
'The market has got it right in terms of stocks down, oil and gold up.'
Israel launched wide scale strikes against Iran, saying it targeted nuclear facilities, ballistic missile factories and military commanders during the start of a prolonged operation to prevent Tehran from building an atomic weapon.
Iran had launched about 100 drones toward Israeli territory in retaliation, which Israel is working to intercept, an Israeli military spokesman said.
Washington said it was not involved in the Israeli offensive.
The developments mean another major geopolitical tail risk has now become a reality at a time when investors are wrestling with major shifts in U.S. economic and trade policies.
'The geopolitical escalation adds another layer of uncertainty to already fragile sentiment,' said Charu Chanana, chief investment strategist at Saxo, adding that crude oil and safe-haven assets will remain on an upward trajectory if tensions continue to intensify.
The Israeli shekel fell almost 2 per cent and long-dated dollar bonds for Israel, Egypt and Pakistan slipped.
U.S. Treasuries were bought in the rush for safer assets, sending the yield on 10-year notes to a one-month low of 4.31 per cent. Bond yields move inversely to prices.
Germany's 10-year bond yield touched its lowest level since early March at around 2.42 per cent.
Daiwa's Scicluna said a further push higher in oil prices could dampen expectations for central bank rate cuts.
'The ultimate response in bond markets to geopolitics is going to depend on how sharp the rise in energy prices is going to be,' he said.
Some traders were attracted to the dollar as a haven, with the dollar index up 0.6 per cent to 98.277, retracing most of Thursday's sizeable decline.
Still, the U.S. dollar is down 1 per cent for the week in a sign that sentiment towards the greenback remains bearish.
The Swiss franc briefly touched its strongest level against the dollar since April 21, before trading 0.2 per cent lower at around 0.8118 per dollar.
Fellow safe haven the Japanese yen edged down 0.2 per cent to 143.79 per dollar, giving up earlier gains of 0.3 per cent.
The euro was down 0.4 per cent at US$1.1534, after rising on Thursday to the highest since October 2021.
Sterling slipped 0.4 per cent to US$1.3556, after marking a fresh high since February 2022 at US$1.3613 early in the day.
'Traders are now on edge over the prospects of a full-blown Middle East conflict,' said Matt Simpson, a senior market analyst at City Index.
'That will keep uncertainty high and volatility elevated.'
- Reuters
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Toronto Star
2 hours ago
- Toronto Star
Mark Carney's challenge will be finding shared goals for G7 leaders
OTTAWA — A rapidly escalating war in the Middle East and threats by Russia to exact revenge on Ukraine have thrust global security on the front burner of looming talks for the world's top leaders. A G7 summit turns not just on the star power of the leaders who show up — and this year all eyes are on U.S. President Donald Trump — but it especially turns on the geopolitical moment in which it is held.
Winnipeg Free Press
2 hours ago
- Winnipeg Free Press
Marines temporarily detain man while guarding LA federal building
LOS ANGELES (AP) — Shortly after they began guarding a Los Angeles federal building Friday, U.S. Marines detained a man who had walked onto the property and did not immediately hear their commands to stop. The brief detention marked the first time federal troops have detained a civilian since they were deployed to the nation's second-largest city by President Donald Trump in response to protests over the administration's immigration arrests. The Marines were activated earlier this week but began their duties Friday. The man, Marcos Leao, was later released without charges and said the Marines were just doing their jobs. A U.S. Army North spokesperson said the troops have the authority to temporarily detain people under specific circumstances. He said those detentions end when the person can be transferred to 'appropriate civilian law enforcement personnel.' Leao's detention shows how the troops' deployment is putting them closer to carrying out law enforcement actions. Already, National Guard soldiers have been providing security on raids as Trump has promised as part of his immigration crackdown. Leao, a former Army combat engineer, said he was rushing to get to a Veterans Affairs appointment when he stepped past a piece of caution tape outside the federal building. He looked up to find a Marine sprinting toward him. 'I had my headphones in, so I didn't hear them,' Leao said. 'They told me to get down on the ground. I basically complied with everything they were saying.' Leao was placed in zip ties and held for more than two hours by the Marines and members of the National Guard, he said. After Los Angeles police arrived, he was released without charges, he said. The Los Angeles Police Department did not immediately respond to a request for comment. 'I didn't know it was going to be this intense here,' he said later. A U.S. official told the AP that a civilian had stepped over the line. He was warned they would take him down and they did, according to the official, who requested anonymity because they were not authorized to discuss the matter. About 200 Marines out of the 700 deployed arrived in the city Friday, joining 2,000 members of the National Guard that have been stationed outside federal buildings this week in Los Angeles. Another 2,000 Guard members were notified of deployment earlier this week. Before the unusual deployment, the Pentagon scrambled to establish rules to guide U.S. Marines who could be faced with the rare and difficult prospect of using force against citizens on American soil. The forces have been trained in de-escalation, crowd control and standing rules for the use of force, the military has said. But the use of the active-duty forces still raises difficult questions. 'I believe that this is an inevitable precursor of things yet to come when you put troops with guns right next to civilians who are doing whatever they do,' said Gary Solis, a former Marine Corps. prosecutor and military judge. He said it's an example of Trump's attempt to unravel the Posse Comitatus Act, which bars active-duty forces from conducting law enforcement. ___ Watson reported from San Diego and Baldor from Washington.
CTV News
2 hours ago
- CTV News
Canadians react to conflict between Israel, Iran
Toronto Watch CTV's Allison Hurst has more on how Canadians are reacting to conflict between Israel and Iran.
