US stock indices decline after Israeli attack on Iran

Israel attacks Iran overnight, targeting nuclear officials and military sites.
Trump pushes Iran to make a nuclear deal, but negotiations are likely over.
Oil prices surge over 8%, which could push inflation higher.
Dow Jones opens 1% lower, while US Treasury yields rise.

Clay Webster FXStreet

Israel launched unilateral strikes on Iranian officials, military sites and nuclear facilities on Thursday night, hostilities that the Trump administration warned about earlier this week but said it was not involved with. The steep rise in expectations that Iran will launch missiles and drones in defense has pushed oil prices over 8% on Friday, and US stocks are selling off in turn.

Some observers are already saying that higher oil prices could put an end to the falling US inflation witnessed earlier in the year. On Thursday, JPMorgan released a research note saying that an all-out war could push oil prices up to $120 and the US Consumer Price Index (CPI) to 5%.

The Dow Jones Industrial Average (DJIA) and NASDAQ Composite (IXIC) both traded 1% lower in response at Friday's open. The S&P 500 (SPX) was somewhat better with a -0.8% decline. The DAX in Germany and the CAC 40 in France both shed over 1% on Friday as well.

In contrast to the usual flight to safety trade, US Treasury yields are higher rather than lower. US oil and defense stocks are also making gains.

US President Donald Trump, whose administration was prepared to continue talks with Iranian officials on Sunday, pushed Iran to complete a peace deal, but that seems less likely now. Iran’s Defense Minister Aziz Nasirzadeh said in recent weeks that if Israel launches attacks on Iran, US military bases in the region will be targeted.

Dow Jones deal with fallout from Israeli attack on Iran

Of the 30 stocks in the Dow Jones index, only five opened on Friday with gains. These were Chevron (CVX), Merck (MRK), Verizon (VZ), Johnson & Johnson (JNJ) and Apple (AAPL). The rest sold off.

The index fell from Thursday's close just under 43,000 to open near 42,500. Visa (V) shed 4.6%, Sherwin-Williams (SHW) lost 3.9%, American Express (AXP) sank 2.1%, and Boeing (BA) lost 1.7%.

The credit card companies are also dealing with fallout from a Wall Street Journal article saying that Walmart (WMT) and Amazon (AMZN) are considering issuing stablecoins to counteract fees from credit cards. Boeing is dealing with reports that the Indian government is likely to ground the entire Dreamliner 787-8 fleet in the country while it investigates an Air India crash that took place on Thursday.

DJIA 1-hour chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

AUD/USD consolidates above 0.7200 after hot Chinese CPI data

AUD/USD is extending its consolidative price action above 0.7200 during the Asian session on Wednesday, uninspired by hot Chinese CPI and PPI data. Meanwhile, rising RBA rate-hike bets act as a tailwind for the Aussie amid Yen-inspired US Dollar weakness. Traders await the release of US inflation figures later in the week for fresh impetus.

USD/JPY stays in red near 153.50 amid aggressive BoJ hike bets

USD/JPY keeps the bearish tone intact at around 153.50 during European trading hours on Wednesday. A strong Reuters Tankan business survey adds to the case for continued BoJ policy normalisation and supports the Japanese Yen. This, along with a broadly weaker US Dollar, keeps the pair close to a nearly seven-month low set on Tuesday.

Gold recovers further from one-week low, retakes $4.400 amid sustained USD selling

Gold builds on its intraday recovery from a one-week low and reclaims the $4,400 mark heading into the European session on Wednesday. The commodity, for now, seems to have snapped a three-day losing streak amid a weaker US Dollar, which remains depressed near its lowest level in over two weeks amid the Bank of Japan-inspired rally in the Japanese Yen.

Pi Network's rebound holds as momentum improves

Pi Network (PI) extends its recovery on Wednesday, trading above $0.098 after finding support around the 50-day Exponential Moving Average earlier this week. The rebound comes as the Pi Core Team highlights the importance of strengthening its developer ecosystem to expand application-level utility across the network.

Oil, Apple and JPY in focus

Oil prices are rising on Wednesday as tit-for-tat strikes between Iran and the US threaten oil supplies as the two sides battle for control of the Strait of Hormuz. Stock futures have switched their attention from a strong earnings season to the challenges ahead, including a 10-year Treasury yield that is hovering close to the 4.8% level.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.