Stocks fell as investors sought safe-haven assets after Iran fired missiles at Israel in retaliation for Israel’s campaign against Hezbollah. MSCI’s global stock index dropped, and Treasury yields dipped, while gold and the U.S. dollar rose. Oil surged over 2% amid fears of supply disruptions following the geopolitical tension.

  • Iran’s Missile Attack: Iran fired ballistic missiles at Israel in retaliation for Israel’s military campaign against Hezbollah in Lebanon. The attacks prompted U.S. President Joe Biden to order military assistance for Israel.
  • Stock Market Reaction:
    • MSCI Global Equities: The MSCI World Index fell 0.53%, reflecting investor concerns over heightened geopolitical tensions.
    • U.S. Stock Indices: The S&P 500 dipped 0.63% to 5,726.45, while the tech-heavy Nasdaq slid 1.19% to 17,973.27. The Dow Jones Industrial Average was relatively flat, down just 0.04% at 42,313.05.
    • European Markets: Europe’s STOXX 600 ended the day down 0.38%, further reflecting global risk aversion.

Commodity and Currency Impact:

  • Oil Prices Surge: Crude oil futures surged as concerns over potential supply disruptions in the Middle East mounted.
    • U.S. Crude: Prices rose 2.44%, settling at $69.83 per barrel.
    • Brent Crude: The global benchmark increased by 2.59%, closing at $73.56 per barrel.
  • Safe-Haven Demand:
    • Gold: Spot gold climbed 1.09% to $2,663.20 per ounce as investors flocked to safety.
    • U.S. Dollar: The U.S. dollar index rose 0.49%, strengthening against major currencies such as the euro and yen. The euro fell to $1.1068, down 0.59%, while the dollar gained 0.1% against the yen, reaching 143.77 yen.

Additional Pressures on U.S. Markets:

  • Hurricane Helene Aftermath: The economic fallout from Hurricane Helene worsened supply chain disruptions, particularly as nearly half of U.S. ocean shipping halted due to an East and Gulf Coast dock worker strike.
  • Treasuries Gain: U.S. Treasury yields fell as investors sought less risky assets.
    • The 10-year note yield dropped by 5.5 basis points to 3.747%, while the 30-year bond yield fell 5.1 basis points to 4.082%.
    • The 2-year note yield, which reflects interest rate expectations, also fell by 2.8 basis points to 3.622%.

Geopolitical and Economic Outlook:

The missile attacks and U.S. support for Israel have escalated fears of broader conflict in the Middle East, leading to market volatility. Investors are also eyeing the upcoming U.S. jobs report for further economic signals, as well as potential disruptions to oil production amid Middle Eastern instability.

The geopolitical tension between Iran and Israel, compounded by domestic supply chain disruptions in the U.S., pushed global equities lower, while oil and gold saw significant gains. Investors are cautious as they navigate a volatile conflict and economic uncertainty landscape.