Middle East violence rattles markets, oil jumps
LONDON (Reuters) -Oil surged, along with European defence stocks, while airline shares plunged after 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.
Fighters from Islamist group Hamas killed 700 Israelis and abducted dozens more as they attacked Israeli towns on Saturday, leaving hundreds dead, in the deadliest incursion into Israeli territory since Egypt and Syria's attacks in the Yom Kippur War 50 years ago.
MARKET REACTION:
— Oil prices surged, with Brent crude trading at $87.25 a barrel — up around 2.5% on the day, after having risen by as much as 5.2% earlier on.
— Israel's shekel weakened sharply. The dollar was last up 1.75% at 3.906 shekels, recovering somewhat after the Bank of Israel said on Monday it will sell up to $30 billion of foreign currency.
-Israel's dollar- and euro-denominated bonds headed for their biggest daily price fall in two years.
— The safe-haven dollar and Japanese yen edged higher. The dollar index was at 106.32, a touch firmer on the day, while the euro shed 0.6% against the yen.
— Spot gold rose around 1% to $1,850 an ounce.
-Safe-haven bonds gained, with U.S. Treasury futures up 0.3% and Germany's 10-year Bund yield down 5 bps at 2.839%, moving off last week's highs.
— An index of shares in European defence companies rose 1.2%, while travel and leisure stocks dropped 1.2%, as the likes of British Airways parent IAG fell 5%.
COMMENTS:
PETER SCAFFRIK, CHIEF EUROPEAN MACRO STRATEGIST, RBC CAPITAL MARKETS, LONDON:
«The uncertainty about what it means for the region means that oil is going up, and there is a bit of ‘risk off’ and hence, bond markets are performing
Read more on investing.com
