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GLOBAL MARKETS-Gold, oil surge in Asia as U.S., Iran exchange threats

Published 06/01/2020, 10:29 am
Updated 06/01/2020, 10:35 am
© Reuters.  GLOBAL MARKETS-Gold, oil surge in Asia as U.S., Iran exchange threats
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Nikkei futures skid as Japan returns from holiday

* Oil prices jump on fears of supply disruptions

* Safe-haven yen, bonds and gold all in demand

By Wayne Cole

SYDNEY, Jan 6 (Reuters) - Asian share markets looked to be heading into turbulence on Monday as a flare-up of tensions in the Middle East sent gold to its highest in almost seven years while oil flirted with four-month peaks.

The United States detected a heightened state of alert by Iran's missile forces, as President Donald Trump warned the U.S. would strike back, "perhaps in a disproportionate manner," if Iran attacked any American person or target. parliament on Sunday recommended all foreign troops be ordered out of the country after the U.S. killing of a top Iranian military commander and an Iraqi militia leader.

Spot gold XAU= surged 1.6% to $1,575.37 per ounce in jittery trade and reached its highest since April 2013.

Oil prices added to their gains on fears any conflict in the region could disrupt global supplies. O/R

Brent crude LCOc1 futures rose $1.05 to $69.65 a barrel, while U.S. crude CLc1 climbed 94 cents to $63.99.

"The risk of further escalation has clearly gone up - given the direct attack on Iran, Iran's threat of retaliation and Trump's desire to look tough - posing the threat of higher oil prices," said Shane Oliver, chief economist at AMP Capital.

"Historically though oil prices need to double to pose a severe threat to global growth and we are long way from that."

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 0.16% though most major indices were yet to open. Futures NKc1 for Japan's Nikkei .N225 pointed to an opening fall of around 500 points.

E-Mini futures for the S&P 500 ESc1 fell 0.4% in very choppy trade.

Sovereign bonds benefited from the safety bid with yields on 10-year Treasuries US10YT=RR down at 1.795% having fallen 10 basis points on Friday. Treasury futures TYc1 gained 7 ticks.

In currency markets, the Japanese yen remained the favoured safe harbour courtesy of Japan's massive holdings of foreign assets. Investors assume Japanese funds would repatriate their money during a true global crisis, pushing the yen higher.

Early Monday, the dollar had edged down to a three-month trough of 107.81 yen JPY= , and risked a pullback all the way to 107.00. The euro likewise eased to 120.45 yen EURJPY= having hit a three-week low.

The dollar was steadier against the other majors, with the euro being little changed at $1.1166 EUR= . Against a basket of currencies, the dollar was holding at 96.852 .DXY .

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes)

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