BANGKOK (AP) — The U.S. and Israeli attacks on Iran rattled world markets early Monday, with U.S. futures falling more than 1% and oil prices soaring.
Asian shares opened lower.
Japan’s Nikkei 225 index lost 2.4%, trading at 57,430.18. Australia’s S&P/ASX 200 shed 0.4% to 9,159.60.
The future for the S&P 500 was down 1.1% and that for the Dow Jones Industrial Average fell 1.2%. The future for the Nasdaq composite slipped 1.1%.
The price of gold, usually viewed as a safe haven for investment in times of uncertainty, rose 2.3% to 5,380.60 and silver gained 2.1%.
Traders were betting the supply of oil from Iran and elsewhere in the Middle East would slow or grind to a halt. Attacks throughout the region, including on two vessels traveling through the Strait of Hormuz, the narrow mouth of the Persian Gulf, have restricted countries’ ability to export oil to the rest of the world.
“Roughly one-fifth of global oil and LNG (liquefied natural gas) flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system,” Stephen Innes of SPI Asset Management said in a commentary.
The price of a barrel of U.S. benchmark crude oil surged 6.8% to $71.58. Brent crude jumped 7.5% to $78.33 per barrel.
Prolonged attacks would likely result in higher prices for crude oil and gasoline, according to energy experts.
Iran exports roughly 1.6 million barrels of oil a day, mostly to China, which may need to look elsewhere for supply if Iran’s exports are disrupted, another factor that could increase energy prices.
The attacks were anticipated, however, with a massive buildup of U.S. forces in the Middle East, and traders have adjusted according.
On Friday, the S&P 500 fell 0.4% to finish just its second losing month in the last 10. The Dow industrials dropped 1.1%, and the Nasdaq composite fell 0.9%. Treasury yields fell in the bond market as investors sought safer places for their money.
“When markets are fragile, they do not need a knockout blow. They just need another weight on the bar,” Innes said.
Also hurting the broad market was a report Friday showing that inflation at the U.S. wholesale level was at 2.9% last month, much higher than the 1.6% that economists expected.
That could pressure the Federal Reserve to hold off longer on its cuts to interest rates. Lower rates would give the economy and prices for investments a boost, but they risk worsening inflation at the same time.
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