SYDNEY : U.S. stock futures slipped in Asia on Monday as the military conflict in the Middle East boosted oil and Treasuries, while the sizzling September U.S. jobs report raised the rate stakes for inflation figures later in the week.
A holiday in Japan made for thin conditions but the initial bid was for bonds and the safe harbours of Japanese yen and gold, with the euro the main loser.
“The risk is higher oil prices, a slump in equities, and a surge in volatility that supports the dollar and yen, and undermine ‘risk’ currencies,” said analysts at CBA in a note.
In particular, there was a chance supplies from Iran might be disrupted, they added.
“Given the tightness already facing physical oil markets in Q4 2023, an immediate reduction in Iran’s oil exports risks pushing Brent futures above $US100/bbl in the short term.”
Israel pounded the Palestinian enclave of Gaza on Sunday, killing hundreds of people in retaliation for one of the bloodiest attacks in its history when Islamist group Hamas killed 700 Israelis and abducted dozens more.
The danger of disruptions to supply was enough to see Brent jump $2.88 to $87.46 a barrel, while U.S. crude climbed $3.02 to $85.81 per barrel.
Gold was also in demand, rising 0.8 per cent to $1,848 an ounce.
In currency markets, the yen was the main gainer though moves were modest overall. The euro dipped 0.3 per cent to 157.44 yen, while the dollar dipped 0.1 per cent to 149.14 yen. The euro also eased 0.2 per cent on the dollar to $1.0566.
The cautious mood was a balm for sovereign bonds after recent heavy selling and 10-year Treasury futures rose a sizable 14 ticks. Yields were indicated around 4.73 per cent compared to 4.81 per cent on Friday. Source: Reuters
