SINGAPORE — Stocks fell along with equity-index futures and investors rushed to the safety of haven assets after Israel attacked Iran’s nuclear programme sites in a major escalation of tensions in the Middle East. Crude oil jumped 11%, the biggest move in more than three years.
Contracts for the S&P 500 index retreated as much as 2%, and a gauge of Asian stocks dropped 1%. Treasuries advanced, with the 10-year yield falling two basis points to 4.34%. Gold rose and cryptocurrencies tumbled. A gauge of the US dollar rose 0.3% after initially falling, buoyed by the shift to safer currencies even amid recent doubts about the reliability of dollar. The currency had hit a three-year low on Thursday.
The airstrikes against Iran’s nuclear programme and ballistic-missile sites renewed a standoff between the two adversaries that risks spiralling into a wider conflict. While the market reaction was strongest in crude oil, moves in other pockets of the market suggested that investors are watching how long the tensions will last and whether the situation escalates.
“We are seeing classical risk-off moves,” said Matthew Haupt, portfolio manager at Wilson Asset Management. “What we are watching now for is the speed and scale of the response from Tehran. That will shape the duration of the current moves. Quite often these moves fade after the initial shocks.”
Israel said the operation will continue for “as many days” as it takes to remove the threat and Iran vowed to respond “harshly.”
Israelis gather in a shelter following sirens in Tel Aviv, Israel, on Thursday. (Photo: Reuters)
The move came after repeated warnings by Israeli Prime Minister Benjamin Netanyahu about striking Iran and crippling its nuclear programme. Iran had previously said it would inaugurate a new uranium-enrichment facility in response to censure by the United Nations (UN) atomic watchdog over its nuclear programme.
The most obvious market impact was in oil as Iran is a major exporter of crude to countries such as China and India. Moves in other sectors were more measured as investors braced themselves for the possibility of a steeper selloff.
“This is very serious,” US-based Kim Forrest, chief investment officer at Bokeh Capital Partners, said. “It’s surprising the market isn’t down more. Do I expect things to get lower in the coming hours? Heck yeah I expect it to be lower by the time I wake up but it’ll also depend who’s talking and what’s happening."
US Secretary of State Marco Rubio said the United States is not involved in the air strikes and that Israel took unilateral action against Iran.
The attack is coming at a time when global financial markets had recovered from a slump in April caused by Trump’s tariffs. An index of global stocks touched a record Thursday, gaining more than 20% from a low hit in April.
The attack is “poised to echo through global markets — not just as a geopolitical flashpoint, but more as a stark wake-up call,” said Hebe Chen, an analyst at Vantage Markets in Melbourne. “Investors now have to face the mounting threat of multi-front tensions, where potential new hot wars and intensifying trade wars collide, reshaping risk sentiment in real time.”
Stocks
S&P 500 futures fell 1.5% as of 12.54pm Tokyo time
Japan’s Topix fell 1%
Australia’s S&P/ASX 200 fell 0.3%
Hong Kong’s Hang Seng fell 0.7%
The Shanghai Composite fell 0.7%
Euro Stoxx 50 futures fell 1.6%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.4% to $1.1541
The Japanese yen was little changed at 143.49 per dollar
The offshore yuan fell 0.2% to 7.1843 per dollar
Cryptocurrencies
Bitcoin fell 1.4% to $104,576.64
Ether fell 4.4% to $2,524.8
Bonds
The yield on 10-year Treasuries declined two basis points to 4.34%
Japan’s 10-year yield declined 3.5 basis points to 1.410%
Australia’s 10-year yield declined eight basis points to 4.16%
Commodities
West Texas Intermediate crude rose 8.8% to $74 a barrel
Spot gold rose 1.2% to $3,427.38 an ounce
