Oil prices surge, U.S. stock futures plunge after Iran missile attack

By The editor On Jan 8, 2020

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Crude oil prices surged and U.S. stock market futures tumbled late Tuesday after Iran fired multiple missiles at air bases in Iraq housing U.S. troops, raising fears of a wider Middle East conflict.

Iranian state TV described the attack as a revenge operation over the killing of Revolutionary Guard Gen. Qassem Soleimani by a U.S. airstrike last week. U.S. officials confirmed missile strikes at two bases in Iraq, but there was no immediate word on damage or casualties.

The attacks — and the near certainty of U.S. retaliation — raise the possibility of oil supply disruptions, as well as the possibility of violence spreading around the already tumultuous region.

After closing lower for the first time in three days in Tuesday’s regular trading session, oil prices rose sharply after news of the attack. The U.S. benchmark, West Texas Intermediate crude for February delivery

CLG20, +4.26%

, jumped more than 4% in electronic trading, up from a settlement of $62.70 Tuesday on the New York Mercantile Exchange

Dow Jones Industrial Average futures

YM00, -1.28%

fell more than 400 points immediately after the attack, and S&P 500

ES00, -1.41%

and Nasdaq Composite futures

NQ00, -1.62%

tumbled as well.

“It’s not going to be pretty today,” Stephen Innes, chief Asia market strategist at AxiTrader, said in a note. “Global equities are being hit, and the need for defensive strategies is paramount. There is no denying the enormity of long-term geopolitical repercussions of the latest events as oil, bond, and gold defensive strategy flows are providing the lead-in for the local cash market opens.”

February gold

GCG20, +1.90%

surged past the $1,600 level — its highest since 2013 — after settling Tuesday at $1,574.30 on Comex.

“Gold will be very volatile,” and American reaction will be closely watched, Chintan Karnani, chief market analyst at Insignia Consultants in New Delhi, told MarketWatch. If President Donald Trump “reacts with aggression, then gold will break past $2,000.” (That would mark an all-time high for gold prices.)

MarketWatch reporter Myra Saefong contributed to this report.

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