Moving markets today: Middle East tensions rattle investors: oil and gold surge, bitcoin slides below $60,000; Iranian official denies missile attack. Focus shifts to UK retail sales and BOE speeches by Ramsden and Breeden
The US stock market saw its fifth consecutive day of decline as hopes for multiple interest rate cuts by the Federal Reserve diminished. ABC News reported Israeli missile strikes hitting a site in Iran. Iran’s state TV stated on Friday that nuclear facilities in Isfahan province remained unharmed, despite initial reports of explosions. However, an Iranian official informed Reuters that there had been no missile attack on Iran. In response to escalating tensions in the Middle East, Asian shares and bond yields dropped, while safe-haven assets like gold and crude oil surged. Oil prices rose by 3 per cent following reports of Israeli strikes on Iran, while gold continued its upward trend for the fifth consecutive week due to heightened geopolitical risks. Bitcoin also experienced a decline, falling below the $60,000 mark in response to the news of Israeli attacks on Iran. Federal Reserve policymakers agreed that there was no immediate need to lower interest rates. Investors are eagerly awaiting the release of UK March Retail Sales data and speeches by BoE’s Ramsden and Breeden later on Friday for further market insights. Here are five key takeaways for your day.
Israeli missiles strike Iran, ABC news reports; Iranian official denies attack
Late on Thursday, ABC News reported that Israeli missiles had struck a site in Iran, according to a US official. This action followed Iran’s drone strike on Israel in response to an attack on the Iranian embassy in Syria. There were reports of explosions at an airport in Isfahan, Iran, though the cause was initially unknown. Isfahan province is home to several Iranian nuclear sites, including Natanz, a critical facility for Iran’s uranium enrichment program. CNN also noted that multiple flights were redirected away from Iranian airspace.
Iran’s state TV assured on Friday that nuclear sites in Isfahan province remained unharmed, while air defence systems in Isfahan city were activated against possible drone threats.
However, an Iranian official clarified to Reuters that there had been no missile attack on Iran.
Oil prices soar 3 per cent following reports of Israeli strikes on Iran
On Friday, oil prices surged in response to reports of Israeli missile strikes hitting a site in Iran, sparking concerns about potential disruptions to Middle East oil supply. Initially, the benchmark contracts surged before slightly easing.
Brent futures rose by 3.04 per cent to reach $89.74 per barrel, while the most active US West Texas Intermediate contract climbed by 3.1 per cent to $84.64 per barrel. Investors have been closely monitoring Israel’s response to the Iranian drone attacks that occurred on April 13.
Federal Reserve officials united in no rush to cut rates
New York Fed President John Williams, echoing Fed Governor Christopher Waller’s stance from February, expressed no urgency for interest rate cuts due to the economy’s strength. Cleveland Fed President Loretta Mester and Atlanta Fed President Raphael Bostic suggested future rate cuts without specifying a timeline. Minneapolis Fed President Neel Kashkari also advocated for patience, hinting at a potential rate cut next year.
Japan’s core inflation cools off in March
In March, Japan’s core inflation slowed, with a key price indicator dropping below 3 per cent for the first time in over a year. The nationwide core consumer price index (CPI), excluding fresh food but including energy, rose 2.6 per cent in March, meeting expectations and down from February’s 2.8 per cent increase. An index tracking price increase excluding fresh food and energy costs eased to 2.9 per cent in March from 3.2 per cent in February, marking the first dip below 3 per cent since November 2022.
Asia stocks plummet, gold surges, and bitcoin slumps amid Middle East attack reports
Overnight, the S&P 500 closed down by 0.24 per cent at 5,010.19 points, while the Nasdaq Composite, which is heavily weighted towards tech stocks, dropped by 0.52 per cent to 15,601.02. On the brighter side, the Dow Jones Industrial Average managed a slight increase of 0.06 per cent to reach 37,777.18.
However, the Russell 2000, which focuses on small-cap stocks, faced its first streak of five consecutive session losses since January, with declines of 0.5 per cent and 0.2 per cent, respectively.
After the closing bell, Netflix experienced a decline of about 5 per cent in extended trading following the release of its quarterly results.
Over in Asia, Japan’s Topix fell by 2.8 per cent, and Korea’s Kospi dropped by 3 per cent, leading to the region’s losses. Hong Kong and mainland Chinese markets also saw sell-offs.
Meanwhile, gold prices surged by 1.3 per cent to $2,409.45, nearing last week’s all-time high of $2,431.29.
Cryptocurrencies took a hit, with Bitcoin dropping below $60,000 amid reports of an Israeli missile strike on Iran, triggering a rush out of risky assets. Bitcoin fell by over 5.5 per cent to $59,961 during the Asia session as the US dollar strengthened. Ether experienced a similar drop, slipping below the $3,000 mark to $2,895.