© Reuters. FILE PHOTO: A reflection of passersby walking is seen on an electronic board showing Japan’s Nikkei average outside a brokerage, in Tokyo, Japan, March 20, 2023. REUTERS/Androniki Christodoulou/File Photo
By Caroline Valetkevitch
NEW YORK (Reuters) – Oil prices jumped more than 4%, gold gained and the U.S. dollar edged up against the euro on Monday as military clashes between Israel and the Palestinian Islamist group Hamas fuelled worries that the conflict could spread beyond Gaza.
Emerging market stocks fell, while major U.S. stock indexes were slightly higher in early afternoon New York trading, recovering from losses earlier in the day.
Israel’s shekel weakened sharply. The dollar was last up 2.9% at 3.951 shekels.
The Bank of Israel earlier said it would sell up to $30 billion of foreign currency to maintain stability. Israeli government bonds also fell, with the 2120 Hundred Year bond down 5.3 cents on the dollar at a record low.
Israel pounded the Palestinian enclave of Gaza in retaliation for one of the bloodiest attacks in its history, unleashing fears of a wider Middle East conflict.
Hamas fighters killed 700 Israelis and abducted dozens more as they attacked Israeli towns on Saturday. It was the deadliest incursion into Israeli territory since Egypt and Syria’s attacks in the Yom Kippur War 50 years ago.
rose 4.46% to $86.48 per barrel and was at $88.04, up 4.09% on the day.
“Typically the most sensitive asset classes to geopolitical risk are emerging markets, commodities and currencies – and, true to form, we’ve seen hits in all of those areas,” said Tina Fordham, geopolitical strategist and founder of Fordham Global Foresight.
Emerging market stocks lost 0.21%, while safe-haven gold was in demand, rising around 1.2% to $1,852 an ounce.
On Wall Street, the rose 58.97 points, or 0.18%, to 33,466.55, the gained 7.94 points, or 0.18%, to 4,316.44 and the dropped 6.80 points, or 0.05%, to 13,424.54.
The pan-European index lost 0.26% and MSCI’s gauge of stocks across the globe gained 0.11%.
“The market at this point has focused on the diplomatic efforts to keep Israel focused on Hamas and reduce the prospect of escalation. There’s an all-out global diplomatic effort to keep this conflict from expanding into the oil-rich region,” said Quincy Krosby, chief global strategist, LPL Financial (NASDAQ:) in Charlotte, North Carolina.
“We don’t see a ‘sell now, ask questions later’ market.”
Against the dollar, the euro fell 0.4% to $1.0544.
The cash Treasury market is closed on Monday for Columbus Day; 10-year Treasury futures rose.
The conflict in the Middle East comes at a time when markets are jittery and bond yields around the world are at multi-year highs.
Investors are anxiously awaiting U.S. consumer price data, due later this week.
The unofficial kickoff of the third-quarter U.S. corporate earnings season is also this week, with J.P.Morgan and other banks due to report results.
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