Oil, safe havens surge after U.S. strikes kill Iran commander

[rooster59]

Oil, safe havens surge after U.S. strikes kill Iran commander

By Herbert Lash and Marc Jones

 

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo

 

NEW YORK/LONDON (Reuters) - Oil prices surged as much as $3 a barrel as gold, the yen and safe-haven bonds all rallied on Friday after the U.S. killing of Iran's top military commander in an air strike in Iraq ratcheted up tensions between Washington and Tehran.

 

Traders were spooked after the death of Major General Qassem Soleimani, head of the elite Quds Force who was also one of Iran's most influential figures, and by Iranian Supreme Leader Ayatollah Ali Khamenei's vow of revenge.

 

U.S. Secretary of State Mike Pompeo said the strike aimed to disrupt an "imminent attack" that would have endangered Americans in the Middle East.

 

The most dramatic moves were in the oil markets, with Brent crude futures <LCOc1> leaping as much 4.5% to $69.20 a barrel, the highest level since Saudi crude facilities were attacked in September.

 

The impact hit almost every asset class. [O/R]

 

MSCI's gauge of stocks across the globe <.MIWD00000PUS> declined 0.52%, while its emerging markets index lost 0.40%.

 

Europe's broad STOXX 600 index <.STOXX> fell as much as 1%, but pared losses to close down 0.33%, while shares on Wall Street fell around 0.8% as New Year optimism, which had pushed equity markets to record highs, evaporated.

 

The yen <JPY=> rose half a percent against the dollar to a two-month high, the Swiss franc <EURCHF=> hit its highest level against the euro since September and gold prices <XAU=> climbed to a four-month peak, racing past the key $1,550 an ounce level.

 

"Geopolitics has come back to the table, and this is something that could have major cross-asset implications," said Salman Ahmed, Lombard Odier's chief investment strategist.

 

"What is critical is how it pans out in the next few days," Ahmed said. "Whether it turns into a theme depends on Iran's reaction and then the U.S. response."

 

Iran promised harsh revenge. The Quds Force and its paramilitary proxies have ample means to mount a response.

 

In September, U.S. officials blamed Iran for attacking the oil installations of Saudi Aramco, the state energy giant and the world's largest oil exporter. Iran has denied responsibility for the strikes and accused Washington of warmongering.

 

The Trump administration then did not respond, beyond heated rhetoric and threats, and markets settled down within a week after Brent surged 14.6%, its biggest one-day percentage gain since at least 1988, on Sept. 16.

 

The U.S. government and others on Friday urged their citizens in the region either to return home or to stay away from potential targets and public gatherings.

 

President Hassan Rouhani said the killing would stiffen Iran's resistance to the United States.

 

Pompeo said in a round of TV interviews that the United States remained committed to de-escalation with Iran but that it had needed to defend itself.

 

"He (Soleimani) was actively plotting in the region to take actions - a big action as he described it - that would have put dozens if not hundreds of American lives at risk. We know it was imminent," Pompeo told CNN.

 

Stocks on Wall Street opened down 1%, the lowest point of the session, as losses were later pared a bit.

 

The Dow Jones Industrial Average <.DJI> fell 233.92 points, or 0.81%, to 28,634.88. The S&P 500 <.SPX> lost 23 points, or 0.71%, to 3,234.85 and the Nasdaq Composite <.IXIC> dropped 71.42 points, or 0.79%, to 9,020.77.

 

The global gauge and Wall Street indexes set record closing highs on Thursday, extending the year-end rally in equities into 2020.

 

Brent settled $2.35 higher at $68.60 after rising as high as $69.20.

 

West Texas Intermediate (WTI) crude <CLc1> rose $1.87 to settle at $63.05 a barrel, after earlier spiking to $64.09 a barrel, its highest level since April 2019.

 

Graphic: Geopolitical tensions rattle world markets -

 

SCRAMBLE TO SAFETY

 

Yields on German Bunds and U.S. Treasuries - the world's benchmark government bonds that are typically seen as the safest assets - fell sharply.

 

The 10-year Bund <DE10YT=RR> yield fell 7 basis points to a two-week low of -0.299%, while Bund futures <FGBLc1> were up 0.62% at 172.33 euros.

 

Benchmark 10-year Treasury notes <US10YT=RR> rose 26/32 in price to yield 1.7916%, from 1.882% late on Thursday.

 

Spot gold prices hit a high of $1,553.20 an ounce. U.S. gold futures <GCcv1> settled 1.5% higher at $1,552.40.

 

The dollar index <.DXY> rose 0.05%, with the euro <EUR=> down 0.09% to $1.116. The Japanese yen <JPY=> strengthened 0.41% versus the greenback at 108.13 per dollar.

 

The focus on geopolitics meant markets paid little attention to stronger-than-expected data from France, where inflation rose 1.6% year-on-year in December, beating analysts' expectations for a 1.4% rise.

 

German inflation figures were also higher, although unemployment in Europe's largest economy rose more than expected.

 

The U.S. manufacturing sector contracted in December by the most in more than a decade, with order volumes crashing to near an 11-year low and factory employment falling for a fifth straight month, the Institute for Supply Management said.

 

(Reporting by Herbert Lash in New York; Additional reporting by Sujata Rao and Dhara Ranasinghe in London and Diptendu Lahiri in Bengaluru; Editing by Chizu Nomiyama and Matthew Lewis)

 

-- © Copyright Reuters 2020-01-04

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[GeorgeCross]

oil the gift that keeps on giving, traditionally low in price right now and with a tendency to spike on bad news in the mid-east

 

cha-ching!

 

USO for the win

[legend49]

1 hour ago, GeorgeCross said:

oil the gift that keeps on giving, traditionally low in price right now and with a tendency to spike on bad news in the mid-east

 

cha-ching!

 

USO for the win

Donny will cry about high fuel costs soon. Karma strikes him so soon.

[DaddyWarbucks]

2 hours ago, legend49 said:

Donny will cry about high fuel costs soon. Karma strikes him so soon.

 

It isn't the worst thinģ that  "Donny"  will have  to face soon

 

[RichardColeman]

Maybe Trump and US elite brought lots of oil the evening before , then decided to take him out. 

[ripstanley]

Kim Jong-un is now on the back burner.

[canuckamuck]

Defense stocks are up too. This is their Christmas.

[MisterTee]

17 hours ago, DaddyWarbucks said:

 

It isn't the worst thinģ that  "Donny"  will have  to face soon

 

You're so right.

Let's see tranquility on the home front survive skyrocketing food and fuel prices caused by a major crisis in the Middle East.

[DaddyWarbucks]

10 hours ago, MisterTee said:

You're so right.

Let's see tranquility on the home front survive skyrocketing food and fuel prices caused by a major crisis in the Middle East.

The " ...major crisis... " you refer to has been an ongoing fact of life in the Middle East since forever... or at least since 1948.

Nevertheless, I concede the point to you.

Domestic turbulence, on a large scale, as a result of Trump's belligerent actions would sink him - and all of us.

 

[sanuk711]

***Breaking News***

France have just declared a full surrender.. ..........

[sammieuk1]

On 1/4/2020 at 7:57 PM, ripstanley said:

Kim Jong-un is now on the back burner.

It will take some while to thaw him out and even longer to cook at least he will be self basting ????

[Cryingdick]

On 1/4/2020 at 9:19 AM, canuckamuck said:

Defense stocks are up too. This is their Christmas.

 

I made a tidy little stack on cyber security stocks. As far as high oil prices I bought gas this morning for $2.39 a gallon. Ifr it goes up our frackers can get some of the action so any high price is tempered by stimulating that industry.

 

[observer90210]

War has always made the crafty, very very rich.

 

However, this not being WW2 era anymore, the SEC should investigate those who massively bought the soaring commodities just few days or hours before the attack and see if any top level politicians are in the pot ... ????

Edited January 5, 2020 by observer90210

[Cryingdick]

28 minutes ago, observer90210 said:

War has always made the crafty, very very rich.

 

However, this not being WW2 era anymore, the SEC should investigate those who massively bought the soaring commodities just few days or hours before the attack and see if any top level politicians are in the pot ... ????

 

When you make accusations with out proof you are implying the SEC can launch endless investigations over your internet hunches. All stocks were soaring before the attack.

 

Oil stocks in particular had been making gains that were outpacing broader markets in the past 6 weeks or so. Except for some mega cap tech and semiconductors. 

 

Maybe call up the SEC and give them a tip. It seems these days somebody can just say on the internet that Trump obviously tipped off people at his resort and it stands unchallenged in the world of internet conspiracies. 

 

Edited January 5, 2020 by Cryingdick

[observer90210]

10 minutes ago, Cryingdick said:

 

When you make accusations with out proof you are implying the SEC can launch endless investigations over your internet hunches. All stocks were soaring before the attack.

 

Oil stocks in particular had been making gains that were outpacing broader markets in the past 6 weeks or so. Except for some mega cap tech and semiconductors. 

 

Maybe call up the SEC and give them a tip. It seems these days somebody can just say on the internet that Trump obviously tipped off people at his resort and it stands unchallenged in the world of internet conspiracies. 

 

My dear chap, you do not seem to know the implicit difference between a suggestion and an accusation....but keep up the good work.

 

p.s. welcome to my ignore list anyhow

[Cryingdick]

1 minute ago, observer90210 said:

My dear chap, you do not seem to know the implicit difference between a suggestion and an accusation....but keep up the good work.

 

p.s. welcome to my ignore list anyhow

 

Okay whatever. You obviously can't address any of the facts that I brought up. So it appears you don't want to engage me in discussion of the markets because I will completely own you using facts. 

[neeray]

36 minutes ago, Cryingdick said:

When you make accusations

We must be reading different content.

My screen shows a suggestion by @observer90210, not an accusation.

[bartender100]

They are finding plenty of oil off the coast of Cuba, South America. The Bahamas will be next.

 

Bahamas Petroleum Company will have exploration drilling starting in April on a massive field.

[Roy Baht]

On 1/4/2020 at 12:29 PM, GeorgeCross said:

oil the gift that keeps on giving, traditionally low in price right now and with a tendency to spike on bad news in the mid-east

 

cha-ching!

 

USO for the win

How is USO looking now?