NEW YORK: Oil prices are up sharply and major stock markets are falling after US forces in Iraq killed a top Iranian general. The price of oil surged 3.5 per cent and major indexes were down 0.8 per cent in early trading . The drops came after a bullish start to the New Year and a blockbuster gain in 2019.
News of the death of Gen. Qassem Soleimani prompted expectations of Iranian retaliation. The S&P 500 fell 25 points, or 0.8 per cent, to 3,232. The Dow Jones Industrial Average lost 224 points, or 0.8 per cent, to 28,640. The Nasdaq lost 77 points, or 0.9 per cent, to 9,013. Bond prices rose.
Oil prices surged and most major global stock markets declined Friday after an Iranian general was killed by US forces in Iraq. Stock indexes in London, Frankfurt and Paris fell, as did Hong Kong's earlier. Shanghai was little-changed and Japanese markets were closed.
News that Gen. Qassem Soleimani, head of Iran's elite Quds Force, was killed in an air attack at the Baghdad international airport prompted expectations of Iranian retaliation against U.S. and Israeli targets.
"A big fat dollop of geopolitical uncertainty has landed on investors desks," said Jeffrey Halley of Oanda in a report.
There was no immediate indication how Iran would respond, but Tehran has seized oil tankers in the past and shot down a US military drone. The US government blames Iran for attacks on tankers and a September assault on Saudi Arabia's oil industry that temporarily cut its production by half.
Brent crude, used to price international oils, was USD 2.48 higher at USD 68.73 per barrel in London after being up nearly USD 3 at one point. Benchmark U.S. crude climbed USD 2.19 to USD 63.37 per barrel in electronic trading on the New York Mercantile Exchange.
In Europe, Germany's DAX tumbled 1.7 per cent to 13,154 and Italy's FTSE MIB droped 1.1 per cent to 23,566. Both countries are net oil importers with big manufacturing sectors. France's CAC 40 fell 0.5 per cent to 6,012 while London's FTSE lost 0.3 per cent to 7,584.
On Wall Street, futures for the benchmark S&P 500 index and Dow Jones Industrial Average were down 0.1 per cent. Both had hit new records Thursday.
In Asia, Hong Kong's Hang Seng lost 0.3 per cent to 28,451.50. The Shanghai Composite Index was off 1.5 points at 3,083.79. India's Sensex lost 0.5 per cent to 41,413.36 and Singapore also declined. Seoul's Kospi was up 1 point at 2,176.46 and Australia's S&P-ASX 200 advanced 0.6 per cent to 6,733.50.
The price of gold, which investors buy in times of uncertainty as a safe haven of value, was up 1.4 per cent at USD 1,548.80 per ounce. Before the escalation in Mideast tensions, investors had been encouraged by expectations of stronger global economic growth in 2020 and the planned signing of an interim U.S.-Chinese trade agreement.
Investors are waiting for Washington and Beijing to formalize the deal that has helped ease market jitters over their 18-month-old fight over China's technology ambitions and trade surplus.
The "Phase 1" pact calls for Washington to roll back punitive tariffs on Chinese goods and for Beijing to buy more American farm products.
This week, President Donald Trump tweeted he will sign the deal at the White House this month. In currency markets, the dollar declined to 108.09 yen from Thursday's 108.56 yen. The euro edged down to USD 1.1140 from USD 1.1171.