Oil up, stocks down after Iran missile attack on US troops

BEIJING (AP) – Oil prices rose and global stock markets fell yesterday after Iran fired missiles at United States (US) bases in Iraq in retaliation for the killing of an Iranian general.

Brent crude futures, the benchmark for international oils, spiked more than USD3 per barrel in London before retreating.

Stock markets in London and Frankfurt opened lower and Tokyo’s benchmark fell nearly two per cent before recovering some of its losses. Hong Kong and Shanghai also retreated.

“Investors appear to be pricing for an all-out war,” said Jingyi Pan of IG in a report.

The Pentagon said Iran fired more than a dozen missiles at bases in Iraq used by US troops. US President Donald Trump tweeted “All is well!” and that casualty and damage assessments were ongoing, adding “So far, so good!”

Iran’s Foreign Minister described the missile firings as “proportionate measures in self-defence”.

A currency trader watches monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. PHOTO: AP

Financial markets have been on edge about possible US-Iranian conflict and disruption of oil supplies since last week’s killing of General Qassem Soleimani by a US drone in Baghdad.

Brent crude was up 78 cents at USD69.05. At the start of trading, it spiked USD3.48 to USD71.75 before retreating.

Benchmark US crude was up 55 cents to USD63.25 per barrel in electronic trading on the New York Mercantile Exchange. It earlier jumped USD2.95 to USD65.65 before settling back.

Higher prices for imported oil could push up inflation in economies including China and India, making it harder for central banks to support growth by easing monetary policy, said Rajiv Biswas of IHS Markit in a report.

In early trading, London’s FTSE 100 lost 0.6 per cent to 7,525.48 and Frankfurt’s DAX shed 0.7 per cent to 13,134.26. France’s CAC 40 lost 0.5 per cent to 5,98049.

On Wall Street, the future for the benchmark Standard & Poor’s 500 index lost 0.2 per cent and that for the Dow Jones Industrial Average was off 0.4 per cent.

On Tuesday, the S&P 500 index lost 0.3 per cent in trading that closed before the Iranian attack. The Dow shed 0.4 per cent and the Nasdaq composite slipped less than 0.1 per cent.

In Asia, Tokyo’s Nikkei 225 index fell 1.6 per cent to 23,204.76 and Hong Kong’s Hang Seng fell 0.9 per cent to 28,087.92.

The Shanghai Composite Index lost 1.2 per cent to 3,066.89 and South Korea’s Kospi retreated 1.1 per cent to 2,151.31.

Sydney’s S&P-ASX 200 shed 0.1 per cent to 6,817.60 and India’s Sensex shed 0.2 per cent to 40,770.06.

Taiwan, New Zealand and Southeast Asian markets also retreated.

Before the latest attack, the rush by investors into safe assets had been abating.

Gold’s momentum eased on Tuesday after touching its highest price in nearly seven years.

In currency markets, the dollar was little-changed at CNY108.43. The euro declined to USD1.1139 from USD1.1152.