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Markets Recoil, and Then Ease, as Traders Digest Iran Attack Markets Recoil, and Then Rally, as Traders Absorb Iran Attack
(about 4 hours later)
Oil prices spiked and then fell back on Wednesday, and global stocks were flat or moderately lower, while U.S. stocks rose slightly, after Iran launched missiles at American forces based in Iraq. Investors signaled their relief on Wednesday after President Trump backed away from further confrontation with Iran, a day after Iranian missile strikes on American positions in Iraq.
The markets’ concerns eased as Iran’s foreign minister suggested that he was ready to stand down for now and President Trump suggested the damage from the attack had been limited, raising hopes of a restrained conflict in a region critical to world oil supplies. Stocks in the United States climbed to new highs shortly after the conclusion of the president’s speech, in which he said the strikes produced no American casualties and that Iran now “appears to be standing down.”
Brent crude, the international benchmark, jumped about 5 percent, as high as $71.75 a barrel, immediately after news of the Iranian missile attack. But within hours it had fallen to $68.60, about 0.2 percent higher than the day before. Oil prices, which had spiked after the missile attacks Tuesday night and fallen early Wednesday, fell further after the televised address. Brent crude, the international benchmark, and West Texas intermediate, were down more than 3.5 percent and 4 percent shortly after midday.
West Texas Intermediate crude also jumped and then receded, and was trading at about $62.95 a barrel, about 0.2 percent lower from Tuesday. Although prices jumped soon after the killing, the upward momentum quickly eased. At the same time, the S&P 500 was up more roughly 0.7 percent to nearly 3,260. If the market holds that level until the end of the trading day, it would be a record, overtaking the previous high-water mark set on Jan. 2.
In stock trading, Britain’s FTSE 100 was unchanged in late-morning trading, while Germany’s DAX fell by about 0.2 percent. In Asia, Hong Kong’s Hang Seng ended the day 0.8 percent lower, and Japan’s Nikkei fell 1.6 percent. The rise was driven in part by fuel-sensitive sectors of the market, which benefit when crude prices decline. Airline stocks jumped, with Delta up more than 2.5 percent shortly after midday. Alaska Air and American Airlines were up both up about 2 percent.
On Wall Street, the S&P 500 climbed at the start of trading. Safe havens such as Treasury bonds and gold — markets where investors typically seek shelter during times of crisis — also reflected the easing tension.
Even before Mr. Trump’s statement, the nervousness in financial markets eased after Iran’s foreign minister suggested that he was ready to stand down for now and President Trump suggested the damage from the attack had been limited, raising hopes of a restrained conflict in a region critical to world oil supplies.
Brent crude jumped about 5 percent overnight to as high as $71.75 a barrel, immediately after news of the Iranian missile attack. But within hours it had fallen back sharply.
West Texas intermediate crude also jumped and then receded, and was trading at about $62.95 a barrel by Wednesday afternoon, about 0.2 percent lower from Tuesday.
In stock trading, Britain’s FTSE 100 was unchanged, while Germany’s DAX rose about 0.7 percent. In Asia, Hong Kong’s Hang Seng ended the day 0.8 percent lower, and Japan’s Nikkei fell 1.6 percent.
Mohammad Javad Zarif, Iran’s foreign minister, said in a tweet that the nation had “concluded proportionate measures in self-defense.” The statement followed two missile attacks on bases in Iraq housing American forces in response to the killing last week of Maj. Gen. Qassim Suleimani.Mohammad Javad Zarif, Iran’s foreign minister, said in a tweet that the nation had “concluded proportionate measures in self-defense.” The statement followed two missile attacks on bases in Iraq housing American forces in response to the killing last week of Maj. Gen. Qassim Suleimani.
In his own tweet shortly after, Mr. Trump suggested that damages and casualties sustained by American forces had been minimal, though the assessment was continuing. “All is well!” he said on Twitter.In his own tweet shortly after, Mr. Trump suggested that damages and casualties sustained by American forces had been minimal, though the assessment was continuing. “All is well!” he said on Twitter.
The risk of a war between the United States and Iran, in the world’s most important oil producing region, the Persian Gulf, has sent shudders through the oil markets in recent days. The fear is that an attack on shipping from the Gulf, or damage to the oil fields of a major producer in the area like Iraq or Saudi Arabia, could restrict global supplies. The risk of a war between the United States and Iran, in the world’s most important oil-producing region, the Persian Gulf, has sent shudders through the oil markets in recent days. The fear is that an attack on shipping from the Gulf, or damage to the oil fields of a major producer in the area like Iraq or Saudi Arabia, could restrict global supplies.
On Wednesday, officials from the Organization of the Petroleum Exporting Countries, the producers’ group, sought to calm fears that the crisis could lead to a major disruption in supplies.On Wednesday, officials from the Organization of the Petroleum Exporting Countries, the producers’ group, sought to calm fears that the crisis could lead to a major disruption in supplies.
“We are not forecasting any shortage of supply unless there is a catastrophic escalation, which we don’t see,” Suhail Mohamed Faraj al-Mazrouei, the oil minister of the United Arab Emirates, told reporters in Abu Dhabi on Wednesday, Reuters reported.“We are not forecasting any shortage of supply unless there is a catastrophic escalation, which we don’t see,” Suhail Mohamed Faraj al-Mazrouei, the oil minister of the United Arab Emirates, told reporters in Abu Dhabi on Wednesday, Reuters reported.
Markets have become so accustomed to a surplus of oil in the global market that they are not as worried about tensions in the Persian Gulf region as they once were.Markets have become so accustomed to a surplus of oil in the global market that they are not as worried about tensions in the Persian Gulf region as they once were.
“Oil has become a broken barometer for gauging Middle East tensions,” Helima Croft, head of global commodity strategy at RBC Capital Markets, an investment bank, said on Tuesday. “It now only reacts after something seismic happens.”“Oil has become a broken barometer for gauging Middle East tensions,” Helima Croft, head of global commodity strategy at RBC Capital Markets, an investment bank, said on Tuesday. “It now only reacts after something seismic happens.”