Oil prices rallied and stocks fell as Iran intensified its rhetoric against Israel after an explosion at a Gaza hospital that complicated diplomatic efforts to rein in the Middle East conflict.
(Bloomberg) — Oil prices rallied and stocks fell as Iran intensified its rhetoric against Israel after an explosion at a Gaza hospital that complicated diplomatic efforts to rein in the Middle East conflict.
S&P 500 and Nasdaq 100 contracts lost at least 0.4%. Crude’s advance accelerated to more than 3% when the foreign minister of Iran, a major exporter, called for an oil embargo against Israel, before the surge in prices eased. Gold rose as investors snapped up haven assets.
Amid the geopolitical concerns, traders are also tracking the latest earnings. Morgan Stanley dropped 2.9% in premarket after third-quarter wealth management revenue missed estimates. Procter & Gamble Co. gained in premarket after organic sales topped expectations.
US President Joe Biden met Prime Minister Benjamin Netanyahu in Israel on Wednesday, hours after the hospital blast killed hundreds and threatened to plunge the region into chaos. Leaders of Jordan, Egypt and the Palestinian Authority canceled a summit with Biden, who planned to use the trip to reinforce the US commitment to Israel.
“The risks of an escalation have risen on the back of the latest news reports regarding the hospital bombing,” said Jane Foley, head of foreign-exchange strategy at Rabobank. While there have been few signs of panic, “on any clear escalation, we can expect to see a ratcheting up of risk aversion,” she said.
In other individual stock moves, United Airlines Holdings Inc. fell 6%, leading declines for other carriers, after the company warned of a potential sharp profit impact from suspended flights to Tel Aviv. Chipmaker Nvidia Corp. was poised for a 1.6% drop, extending its 4.7% slump in the previous session.
The latest US earnings reports will be studied for insights on the state of the economy and the risks of a recession, with Netflix Inc. and Tesla Inc. kicking off tech-related results later Wednesday.
“Currently, whether we are going to see a soft landing is important for where markets head to,” said Janet Mui, head of market analysis at RBC Brewin Dolphin. “The data has been a bit mixed, so we will take the cues from earnings season to see the guidance on order books, for instance.”
Wednesday’s US economic releases showed that new housing starts increased less than forecast in September, climbing 7% to a 1.36 million annualized rate, against expectations for 1.38 million.
Europe’s Stoxx 600 Index fell 0.5%. Among other individual movers, ASML Holding NV, Europe’s most valuable technology company, slumped 1.7% after order intake plunged in the third quarter.
Adidas AG advanced 5.3% after the sportswear maker boosted its guidance, helped by sales of more Yeezy sneakers from its canceled partnership with the rapper Ye. Nexi SpA jumped as much as 19% after people with knowledge of the matter said CVC Capital Partners is in the early stages of considering a potential bid for European payments firm.
In Asia, an index of China’s property developers fell to the lowest since 2009 and distressed Chinese builder Country Garden Holdings Co. signaled it is set for its first-ever default.
Meanwhile, traders sifted through data showing UK inflation exceeded forecasts, leaving open the possibility of a further rate hike from the Bank of England. Ten-year gilt yields rose for a third day, adding six basis points to 4.58%. The pound added 0.2% to $1.22, before paring its gains.
Key events this week:
- Netflix, Tesla earnings, Wednesday
- Federal Reserve issues Beige Book economic survey, Wednesday
- Philadelphia Fed President Patrick Harker and New York Fed President John Williams speak at separate events, Wednesday
- Australia unemployment, Thursday
- Japan trade, Thursday
- China property prices, Thursday
- US initial jobless claims, existing home sales, leading index, Thursday
- Federal Reserve Chair Jerome Powell, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan speak at different events, Thursday
- Japan CPI, Friday
- China loan prime rates, Friday
- Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.4% as of 8:37 a.m. New York time
- Nasdaq 100 futures fell 0.6%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 fell 0.5%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0563
- The British pound was little changed at $1.2190
- The Japanese yen was little changed at 149.69 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $28,389.4
- Ether rose 1.3% to $1,580.33
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.85%
- Germany’s 10-year yield advanced two basis points to 2.90%
- Britain’s 10-year yield advanced nine basis points to 4.60%
Commodities
- West Texas Intermediate crude rose 1.5% to $87.98 a barrel
- Gold futures rose 1.4% to $1,962.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar and Winnie Hsu.
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