Stocks Smashed on Middle East Escalation – Nasdaq down 1.6%
US Stock markets took a big hit in trading on Friday as tensions escalated in the Middle East, and markets are likely to open in the red today after attacks materialized. The Dow closed the day down 1.24%, the S&P dropped 1.46%, experiencing its biggest one-day loss in nearly 6 months, and the Nasdaq took a 1.62% hit. Haven products rallied, with the dollar driving higher against most of its contemporaries, contributing to a 0.7% gain for the Dxy last week. Oil prices spiked higher but have remained relatively calm on the open today, with Brent now trading up at $90.90 per barrel and WTI at $85.80 per barrel. Gold has traded higher on the open today after a very volatile session on Friday saw it make another new all-time high at $2,419.79 before closing back down near $2,340. Currently trading around the $2,356 level after settling on the Asian open.
Middle East Tensions to Dominate Market Action Today
Moves in the global financial markets are set to be dominated by developments in the Middle East over the next few days as traders have their eyes fixed on newswires for any fresh updates. So far it has been a bit of a case of ‘buy the rumour, not so much the fact’ as markets moved hard on Friday in anticipation of missile strikes from Iran on Israel but have been more stable on the open after the weekend’s action. Iran has said that the attacks on the weekend are the end of their ‘response’ to Israel’s initial strike on their Syrian embassy and now traders will have to watch their screens closely for the next moves. The Asian session should be relatively calm but expect things to heat up again once the Middle East wakes up and updates start again from both sides.
Market Volatility Expected Today Despite a Quiet Calendar
Traders are expecting to see much higher volatility in the sessions ahead as the market reacts to the current tinder box situation in the Middle East. The market open has so far been relatively calm given the weekends’ actions, but many are expecting more and harder moves, especially in haven products as the day progresses. There is nothing on the event calendar in the first two sessions of the day, but we have some key US data releases due once New York opens with the release of the latest Retail Sales data and Empire State Manufacturing Index due out early in the day. Expect these to affect markets in the short term but the bigger geopolitical situation is likely to have a much stronger effect today.
