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Global Market Reaction to Iran Missile Attack in Four Charts

Andreea Papuc, Cormac Mullen and Adam Haigh
Global Market Reaction to Iran Missile Attack in Four Charts

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Safe-haven assets, U.S. equity futures and Asian stocks swung wildly Wednesday as tensions in the Middle East escalated, rattling global financial markets.

Iran’s attack on American military bases in Iraq, a response to the killing of General Qassem Soleimani by American forces last week, injected new volatility into global assets that enjoyed a blockbuster 2019. S&P 500 futures dropped as much as 1.7% as fears of a protracted conflict increased, before paring the decline as Tehran said it wasn’t seeking a war, and President Donald Trump declared “all is well.”

Here are some charts showing the moves:

Oil and U.S. Stocks

West Texas Intermediate crude futures initially jumped by as much as 4.4% while CME E-mini S&P 500 Index futures tumbled by more than 1%. The moves eased later as there were no signs of an immediate military response from Washington.

Treasuries, Dollar/Yen

Ten-year Treasury yields dropped more than 11 basis points to 1.70% before paring much of the loss, and the dollar swung against yen. Further conflict in the Middle East could send 10-year Treasury yields to as low as 1.6% in the short-to-medium term, said Kyle Rodda, analyst at IG Markets in Melbourne.

Gold

The precious metal rose through $1,600 an ounce to the highest level since 2013 before retreating from its highs.

Volatility

The Nikkei Stock Average Volatility Index soared as much as 4 points and CBOE Volatility Index January futures advanced almost 3 points, as options traders scrambled to reprice future expectations for swings in stock markets. The moves retraced as investors stepped in to buy the dip in risk assets.

(Updates throughout with rebound in risk assets.)

--With assistance from Ruth Carson.

To contact the reporters on this story: Andreea Papuc in Sydney at apapuc1@bloomberg.net;Cormac Mullen in Tokyo at cmullen9@bloomberg.net;Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Joanna Ossinger, Ravil Shirodkar

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