Business
Gold, Oil Jump In Asia As U.S. And Iran Trade Threats
The United States detected a heightened state of alert by Iran’s missile forces, as President Donald Trump warned the U.S. would strike back, “perhaps in a disproportionate manner,” if Iran attacked any American person or target.
Iraq’s parliament on Sunday recommended all foreign troops be ordered out of the country after the U.S. killing of a top Iranian military commander and an Iraqi militia leader.
Spot gold XAU= surged 1.2% to $1,569.47 per ounce in jittery trade and reached its highest since April 2013.
Oil prices added to their gains on fears any conflict in the region could disrupt global supplies. [O/R]
Brent crude LCOc1 futures rose $1.02 to $69.62 a barrel, while U.S. crude CLc1 climbed 81 cents to $63.86.
“The risk of further escalation has clearly gone up – given the direct attack on Iran, Iran’s threat of retaliation and Trump’s desire to look tough – posing the threat of higher oil prices,” said Shane Oliver, chief economist at AMP Capital.
“Historically though oil prices need to double to pose a severe threat to global growth and we are long way from that.”
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 0.2% though China had yet to open.
Japan’s Nikkei .N225 slid 1.7% in a sour return from holiday, while E-Mini futures for the S&P 500 ESc1 fell 0.4% in very choppy trade.
Sovereign bonds benefited from the safety bid with yields on 10-year Treasuries US10YT=RR down at 1.77% having fallen 10 basis points on Friday. Treasury futures TYc1 gained 7 ticks.
In currency markets, the Japanese yen remained the favored safe harbor courtesy of Japan’s massive holdings of foreign assets. Investors assume Japanese funds would repatriate their money during a true global crisis, pushing the yen higher.
Early Monday, the dollar was flat at 108.00 yen JPY=, after touching a three-month trough of 107.78. The euro likewise eased to 120.45 yen EURJPY= having hit a three-week low.
The dollar was steadier against the other majors, with the euro little changed at $1.1166 EUR=. Against a basket of currencies, the dollar was holding at 96.853 .DXY.
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