Outlook for the day: Neutral after an escalation in hostilities in the Middle East prompted a classic "flight to safety", driving US stocks lower and raising oil, gold, the greenback and other traditional havens.
ASX futures: up 2 points or 0.02%
Overnight themes:
US stocks sank as Iran launched a ballistic missile attack on Israel, and a port strike threatened disruption to the US economy.
The S&P 500 shed 0.93% as gains in arms companies, energy producers, gold miners and other traditional defensive assets were outweighed by falls across the wider market. The Dow dropped 0.41%. The Nasdaq lost 1.53%.
Volatility jumped and oil posted its highest settlement in a week and later added to gains after Israeli forces entered Lebanon, and Iran fired missiles at Israel. Brent crude settled 2.6% ahead at US$73.56 a barrel, and was lately up another 1.07% at US$74.35 amid signs the conflict was expanding in a way that threatens crude supplies. The VIX or volatility index rallied more than 15%. The S&P energy sector advanced 2.23%.
"It’s possible that Israel will respond and make good on its threats to take out Iran refining and oil-production facilities” - Phil Flynn, senior market analyst at the Price Futures Group (per MarketWatch).
A strike by east coast dockworkers added to market headwinds. The head of the International Longshoremen's Association last month threatened to cripple the US economy in the run-up to what could be the largest shutdown of US ports in nearly five decades.
Tech companies and small caps copped the worst of the selling. The S&P tech sector slumped 2.66% as Apple, Nvidia and Tesla declined. The Russell 2000 index of small caps gave up 1.48%. The S&P 500 airlines index shed 1%.
"If we do see further escalation I could see continued market weakness because we just don't know how far this is going to go... The level of risk has increased. The markets have had a good year and people can get scared out of the market depending on what happens over the next couple of weeks" - Peter Tuz, president of Chase Investment Counsel (per Reuters).
Industrial metal prices lifted on the London Metal Exchange in the wake of fresh Chinese stimulus measures last week. Copper, nickel, aluminium, zinc and tin all gained at least 1% overnight in thin trade as China began a national holiday that will last the rest of this week. Iron ore futures firmed 1.2% in Singapore.
Gold miners rose in the US for the first time in three sessions as demand for havens helped precious metals rebound from a two-day sell-off. The NYSE Arca Gold Bugs index advanced 1.89% as hostilities escalated in the Middle East.
Key events today:
China market holiday
OPEC+ bimonthly meeting - tonight
US September private payrolls - tonight
S&P 500: down 54 points or 0.93%
Dow: down 173 points or 0.41%
Nasdaq: down 279 points or 1.53%
Dollar: down 0.47% to 68.83 US cents
Iron ore (Singapore): up 1.2% to US$108.74
Brent crude: up US$1.86 or 2.6% to US$73.56
Gold (futures): up US$30.90 or 1.2% to US$2,690.30
Gold (spot): up US$27.47 or 1.05% to US$2,663.22
Silver (spot): up 17 US cents or 0.54% to US$31.41
NYSE Arca Gold Bugs: up 1.89%
Bitcoin: down 4.64% to US$60,843
Copper (LME): up 1.18% to US$9,945
Nickel (LME): up 1.2% to US$17,700
Lithium carbonate (China): up 0.13% to 75,650 yuan
Global X Lithium & Battery Tech ETF: up 1.19%
Uranium (spot): steady at US$82.25
Global X Uranium ETF(URA): up 2.24%
BHP: up 0.45% (US); up 0.95% (UK)
