There were some wild swings in the markets overnight after Iran carried out its retaliation for the US attacks last week. More than a dozen ballistic missiles were aimed at US forces in Iraq in the first military move against Washington since the killing of Qassem Soleimani.
Oil prices jumped with Brent crude moving above its recent peak to trade close to the $71 handle while gold prices surged above the $1600/oz mark to hit levels not seen since Q1 2013.
US stock futures tumbled by more than 1.5% as a clear risk-off mood gripped the markets.
However, these moves were subsequently pared and this has become a recurring theme in recent sessions as the initial knee jerk reaction faded back. The rationale for this seems to be that despite the clear escalation in US-Iranian tensions over the past week traders are still of the belief that things won’t get as bad as many have feared. Defence minister, Amir Hatami, has said that the response will be proportional and it is perhaps telling that the attacks seem to have been directed as to not cause maximum damage. We still await a detailed response from Trump, but his initial reaction on Twitter with a post that began with “All is well” suggests that the retaliation may not have further angered the US president.
While the markets remain on tenterhooks, fearful of any further escalation, there is a growing feeling that the latest events could have signalled a high-water mark in tensions between Tehran and Washington and hopefully the situation will not flare up any further.
Boeing (NYSE:BA) 737 crashes in Tehran
In what appears to be an unrelated incident, a Ukraine International Airlines Boeing (NYSE:BA) 737-800 crashed shortly after take-off from Tehran’s international airport, killing all 176 passengers and crew onboard. A “technical failure” following a fire is believed to have caused the tragedy which saw the plane crash around 6 minutes after take-off. The disaster involving a Boeing plane will once more draw unwanted attention to the firm, which was widely criticised for its response to earlier crashes in Indonesia and Ethiopia.
The latest incident involved and older version of the 737, the bestselling commercial jet in history, than the 737 max and while it may well be totally unrelated, it will raise questions as to the safety of its operational fleet. When Wall Street opens this afternoon there will no doubt be additional focus on the price action in Boeing (NYSE:BA), with pre-market trade pointing at the stock beginning in the red by somewhere in the region of 3-4% and not far from its lowest level in a year.