(Bloomberg) -- Financial markets are likely to face a volatile start to the week in Asia after geopolitical tensions flared in the Middle East, sending futures in the region lower. The yen advanced as investors favored haven assets.
As investors assess the fallout from the U.S. killing in an airstrike of Iran’s top military commander, Japanese futures dipped with traders returning after an extended holiday last week. They also slipped in Sydney and Hong Kong. The yen held near its strongest against the dollar in almost three months amid demand for haven assets.
All the Middle East’s major equity gauges fell Sunday. The S&P 500 Index posted its biggest loss in a month Friday. Gold and Treasuries climbed in a flight to safety. Oil surged on Friday.
The Middle East events soured the mood after 2019 ended with spectacular gains across asset classes that sent equity gauges near record highs. Investors are entering the new year on the back foot with the spotlight on geopolitical risks after Iranian General Qassem Soleimani was killed in Iraq last week in a drone attack ordered by U.S. President Donald Trump.
Iran’s President Hassan Rouhani vowed revenge, while Trump said late Saturday the U.S. had identified 52 Iranian sites that would be hit “very hard” if Tehran retaliated. Iran also said it would no longer abide by any limits on its enrichment of uranium, while Iraq’s parliament voted to expel U.S. troops from the country.
These are the moves in major markets:
Stocks
- Nikkei 225 futures fell 0.2% in Singapore.
- Australia’s S&P/ASX 200 Index slipped 0.1%.
- Hong Kong’s Hang Seng Index fell 0.1% earlier.
- The S&P 500 Index fell 0.7% Friday.
- The yen rose 0.2% to 107.90 per dollar.
- The offshore yuan was at 6.9690 per dollar.
- Bloomberg Dollar Spot Index rose 0.1% Friday.
- The euro was at $1.1164.
- The yield on 10-year Treasuries fell nine basis points to 1.79%, a one-month low.
- West Texas Intermediate crude increased 3.1% to $63.05 a barrel.
- Gold rose 1.5% to $1,552.20 an ounce, the highest since September.