Geopolitical tensions soared in the Middle East yesterday as Iran sent almost 200 ballistic missiles towards Israel. The U.S., with assistance from Israel, intercepted many of these missiles. Jake Sullivan, the U.S. National Security Adviser, warned of "severe consequences" for Iran, vowing that the U.S. would "work with Israel" to ensure accountability. In a political security meeting, Israeli Prime Minister Benjamin Netanyahu declared, “Iran made a big mistake tonight, and it will pay for it.”
Oil prices surged due to the escalations, as fears of a potential full-scale regional war in the Middle East raised concerns about disruptions to energy exports. Brent crude spiked by 5%, reaching $75.40 a barrel during Tuesday's trading, while U.S. benchmark WTI also climbed 5%, peaking at $71.84 a barrel before settling at $71.06. U.S. stocks fell as risk-averse assets rallied in response to the growing tensions. The S&P 500 dropped by 0.9%, marking its worst day in nearly a month, while the Nasdaq fell 1.5%. However, energy companies and defense contractors bucked the trend, with the S&P 500 energy sub-index gaining 2.2%.
Overnight, Hong Kong’s Hang Seng index jumped more than 4%, driven by tech and electric vehicle stocks amid growing anticipation of further stimulus from Chinese authorities. Shares of companies like Li Auto, Meituan, HKEX, and Xiaomi surged as investors speculated about additional economic support measures from Beijing. Meanwhile, mainland China's markets remained closed for the Golden Week celebrations. Elsewhere in Asia, markets were less upbeat: Japan’s Topix dropped over 1%, Korea’s Kospi declined slightly, and Australia’s S&P/ASX 200 remained flat.
Today's data includes the S&P Global Manufacturing PMI, along with speeches from several U.S. Federal Reserve officials, including Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem, and Fed Governor Michelle Bowman.
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