(Bloomberg) — Oil surged after Hamas’s surprise attack on Israel raised fears of a wider conflict. Investors avoided traditionally risky assets such as stocks and instead bought gold, bonds and the dollar.
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West Texas Intermediate jumped more than 5%, before paring the advance, and an index of dollar strength added 0.2%. US equity futures retreated, while Europe’s Stoxx 600 index erased earlier declines to trade little changed. Gold climbed 1%.
The Israeli shekel weakened 2%, touching the lowest in seven years, even after the Bank of Israel unveiled an unprecedented program to support markets. The central bank plans to sell as much as $30 billion in foreign exchange, and extend up to $15 billion through swap mechanisms to support markets.
“There’s no panic across markets — this is a classic risk-off positioning towards safe havens,” said Alexandre Baradez, chief market analyst at IG Markets in Paris. “If you add in the conflict to the macro-economic uncertainties in Europe and China, hawkish central banks, already rising oil prices and the upcoming earnings season, there’s really no reason for markets to take an upward trend.”
While the latest events aren’t an immediate threat to oil flows, traders are concerned the conflict may become a proxy war. The US said it was dispatching warships and the Wall Street Journal reported that Iranian security officials helped plan the strike.
Iran is both a major oil producer and supporter of Hamas. Any retaliation against Tehran may endanger the passage of vessels through the Strait of Hormuz, a vital conduit that Iran has previously threatened to close.
Despite the risk-off moves and the slump in Middle Eastern markets on Sunday, investors were taking a wait-and-see approach.
“If one takes a cold look at the situation, the weight of Israel and Palestine is insufficient to alter the current drivers of financial markets, which are primarily focused on central bank policies and the incoming earnings season,” said Mabrouk Chetouane, head of global market strategy at Natixis Global Asset Management in Paris.
Read more: Israel-Related Stocks Under Pressure After Hamas’ Shock Attack
Trading in US cash Treasuries is closed for a public holiday on Monday.
Elsewhere, Metro Bank shares jumped 20% after the troubled UK lender clinched a £925 million ($1.1 billion) financing package, a deal that will impose a 40% haircut on some bondholders and see Colombian financier Jaime Gilinski take a controlling interest.
The agreement buys the British retail and commercial bank some much-needed breathing space after a tumultuous week that saw its share price whipsaw and consulting firm EY approach a number of lenders to submit offers.
Key events this week:
China money supply, new yuan loans, Monday
Bank of England policymaker Catherine Mann speaks, Monday
World Bank-IMF annual meetings open in Marrakech, Morocco, Monday
Fed Vice Chair Michael Barr speaks, Monday
Dallas Fed President Lorie Logan speaks, Monday
Fed Governor Philip Jefferson speaks, Monday
Japan balance of payments, Tuesday
BOE releases minutes of financial policy meeting, Tuesday
The IMF issues its latest world economic outlook, Tuesday
US wholesale inventories, Tuesday
Fed Governor Christopher Waller delivers keynote address, Tuesday
Minneapolis Fed President Neel Kashkari speaks, Tuesday
Germany CPI, Wednesday
NATO defense ministers meeting in Brussels, Wednesday
Russia Energy Week in Moscow, with officials from OPEC members and others, Wednesday
US FOMC minutes, PPI, Wednesday
Fed Governor Michelle Bowman speaks during World Bank-IMF meetings, Wednesday
Japan machinery orders, PPI, Thursday
Bank of Japan’s Asahi Noguchi speaks, Thursday
UK industrial production, Thursday
ECB publishes account of September policy meeting, Thursday
BOE’s Huw Pill speaks, Thursday
US initial jobless claims, CPI, Thursday
China CPI, PPI, trade, Friday
G20 finance ministers and central bankers meet as part of IMF gathering, Friday
ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
Eurozone industrial production, Friday
France CPI, Friday
BOE’s Andrew Bailey speaks, Friday
US University of Michigan consumer sentiment, Friday
Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.2% as of 10:26 a.m. London time
S&P 500 futures fell 0.4%
Nasdaq 100 futures fell 0.6%
Futures on the Dow Jones Industrial Average fell 0.3%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index was little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.4% to $1.0543
The Japanese yen rose 0.1% to 149.12 per dollar
The offshore yuan rose 0.3% to 7.2856 per dollar
The British pound fell 0.4% to $1.2189
Cryptocurrencies
Bitcoin fell 0.5% to $27,780.18
Ether fell 1.3% to $1,616.49
Bonds
The yield on 10-year Treasuries was little changed at 4.80%
Germany’s 10-year yield declined four basis points to 2.84%
Britain’s 10-year yield declined four basis points to 4.54%
Commodities
Brent crude rose 2.7% to $86.85 a barrel
Spot gold rose 1% to $1,851.57 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar.
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