A new decade, a new conflict. The post-holiday market daze was shattered Friday after the US used a targeted airstrike to kill a top Iranian military leader, the head of the Iranian Revolutionary Guards’ overseas forces Qassem Soleimani. The conflict between the US and Iran which has simmered throughout last year and has resulted in tanker seizures and the blowing up of top Saudi Arabian refining facilities is now on course for a new escalation as Tehran has already promised harsh retaliation.
Oil prices shot up in the wake of the move as did other safe haven assets such as bonds and gold. Brent crude jumped up over 4% and broke above the $69 line before it ran into the first slew of light selling while gold has moved up in a smooth line to $1,551.
Airlines hardest hit
European stocks plunged across the board with the DAX taking the worst damage, falling 1.83%. In London, airlines were hit the hardest because of the spike in oil prices but the FTSE’s decline was somewhat tempered by stronger oil stocks and a rally in British American Tobacco shares.
Iran headlines completely overshadowed news that China has broken off the London-Shanghai stock trading link because of tensions in Hong Kong. In the current environment where oil, gold and share prices are all responding fast to the Middle East news it may take a while before markets fully digest the fact that the business ties with China, which the UK has worked so hard to build up over the last decade but particularly since the Brexit decision, could now be called into question, leaving the UK hanging at a time when it needs trade deals more than ever.
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.