Oil rises and stocks fall due to Middle East conflict: Markets fall

(Bloomberg) — Oil rose more than 5% on fears of a wider conflict after Hamas’ surprise attack on Israel. Investors abandoned traditionally risky assets like stocks and instead bought gold, bonds, and dollars.

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West Texas Intermediate climbed above $87 a barrel and the dollar strength index rose 0.3%. Europe’s Stoxx 600 index fell 0.4% and US futures also fell. Gold rose 1%.

The Israeli shekel weakened 2% to its lowest in seven years, even after the Bank of Israel unveiled an unprecedented program to support markets. The central bank plans to sell up to $30 billion of foreign currency and raise up to $15 billion through a swap mechanism to support markets.

“The weekend’s events clearly destabilized the sector,” said Kyle Rodda, senior markets analyst at Capital.com. “Ultimately, these events only have short-term effects on financial markets, and it is possible that the same will be the case this time. Investors may jump around for a few days until the risk to the upside clearly subsides.

The fallout from the attacks caused turmoil in Middle East markets on Sunday. The region’s main equity indexes fell as Israel’s benchmark TA-35 stock index fell, posting its biggest loss in more than three years. The benchmark ended 0.5% higher on Monday after falling 6.5% in the previous session.

The violence is clouding the outlook for companies that derive a portion of their revenues from Israel, threatening to hurt shares of some global generic drug makers, chip makers, diamond processors and software-services providers.

Read more: Israel-related stocks under pressure after shocking Hamas attack

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Although the latest incidents do not pose an immediate threat to oil flows, traders worry the conflict could become a proxy war. The US said it was sending warships and the Wall Street Journal reported that Iranian security officials helped plan the attack.

Iran is both a major oil producer and a supporter of Hamas. Any retaliation against Tehran could jeopardize the passage of ships through the Strait of Hormuz, a vital conduit that Iran has previously threatened to close.

“Any expansion of this in oil-producing countries, of which Saudi Arabia is the leader, could make the price of crude more expensive, would have negative inflationary effects for the West and would mean higher rates in the long run,” said Guillermo Santos, head of strategy. There will be rates.” At Spanish private banking firm iCapital.

Trading in US cash treasuries is closed on Monday due to a public holiday.

Elsewhere, Metro Bank shares jumped 20% after the troubled UK lender secured a £925 million ($1.1 billion) financing package, a deal that will give some bondholders a 40% discount and bring in Colombian financier Jaime Gilinsky. Will lead to controlling interest.

The deal gives the British retail and commercial bank some much-needed breathing space after a tumultuous week, in which its share pricing and consultancy firm EY was approached by multiple lenders to submit an offer.

Major events of this week:

• China money supply, new yuan loans, Monday

• Bank of England policymaker Katherine Mann speaking on Monday

• The annual meetings of the World Bank-IMF began in Marrakesh, Morocco on Monday.

• Fed Vice Chairman Michael Barr speaks on Monday

• Dallas Fed President Laurie Logan speaks on Monday

• Fed Governor Philip Jefferson speaks on Monday

• Japan balance of payments, Tuesday

• BOE released minutes of financial policy meeting on Tuesday

• The IMF releases its latest world economic outlook on Tuesday

• US wholesale list, Tuesday

• Fed Governor Christopher Waller delivers keynote address on Tuesday

• Minneapolis Fed President Neel Kashkari speaks on Tuesday

• Germany CPI, Wednesday

• NATO defense ministers meeting in Brussels on Wednesday

• Russia Energy Week in Moscow, with officials of OPEC members and others on Wednesday

• US FOMC Minutes, PPI, Wednesday

• Fed Governor Michelle Bowman speaking during the World Bank-IMF meeting on Wednesday

• Japan Machinery Orders, PPI, Thursday

• Bank of Japan’s Asahi Noguchi speaks, Thursday

• UK industrial production, Thursday

• The ECB published accounts of its September policy meeting on Thursday

• BOE’s Hue Pil speaks, Thursday

• US initial jobless claims, CPI, Thursday

• China CPI, PPI, Trade, Friday

• G20 finance ministers and central bankers meet on Friday as part of the IMF gathering

• ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak at IMF panel on Friday

• Eurozone industrial production, Friday

• France CPI, Friday

• BOE’s Andrew Bailey speaks, Friday

• US University of Michigan consumer sentiment, Friday

• Results from Citigroup, JPMorgan, Wells Fargo, BlackRock, quarterly earnings season begins on Friday

• Philadelphia Fed President Patrick Harker speaks on Friday

Some key movements in the markets:

shares

• The Stoxx Europe 600 fell 0.3% at 9:27 a.m. London time

• S&P 500 futures fell 0.8%

• Nasdaq 100 futures fell 0.9%

• Futures on the Dow Jones Industrial Average fell 0.7%.

• MSCI Asia Pacific indices remained unchanged

• MSCI emerging markets index fell 0.2%

currencies

• Bloomberg dollar spot index rose 0.3%

• The euro fell 0.5% to $1.0528

• The Japanese yen rose 0.1% to 149.16 per dollar

• The offshore yuan rose 0.2% to 7.2926 per dollar

• The British pound fell 0.5% to $1.2176

cryptocurrency

bond

• The yield on 10-year Treasuries was little changed at 4.80%

• Germany’s 10-year yield fell four basis points to 2.85%

• UK 10-year yield fell two basis points to 4.55%

Goods

• Brent crude rose 2.5% to $86.69 per barrel

• Spot gold rose 0.9% to $1,850.02 an ounce

This story was generated with the assistance of Bloomberg Automation.

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