U.S. stocks fall due to escalation between Israel and Iran: online
Futures on U.S. indices are down more than 1%, with contracts on the Russell 2000, which targets small companies, leading the decline. At the same time, gold mining, energy and defense players showed growth at the premarket - amid investors' flight to protective assets, the threat of disruption of oil supplies through the Strait of Hormuz and expectations of increased military spending due to the escalation between Israel and Iran.
On the night of Thursday through Friday, June 13, the Israeli army launched strikes against Iran's nuclear infrastructure and key military installations. Iran responded with a drone attack, which the Israeli Air Force intercepted outside the country. Oninvest reports on the situation in the Middle East and the reaction in international markets online.
15:30 CET US indices fell at the open, with the broad market S&P 500 index losing 0.6 percent, the tech-heavy Nasdaq Composite down 0.7 percent and the industrial Dow Jones down 1 percent, CNBC shows.
15:10 CET Another sign that the escalation between Israel and Iran has dramatically changed the mood in the oil market was a rebound in the options market, Bloomberg reports. In the morning of Friday, June 13, options on both Brent crude and U.S. West Texas Intermediate were actively traded, with bullish contracts prevailing, the agency points out.
This week about 70 thousand contracts were concluded for September Brent options with the strike price of $85 per barrel. For comparison: last week there were about 5.5 thousand such deals
For both oil grades, volatility rose sharply after the Israeli strikes, and a related sentiment indicator showed the most bullish mood since March 2022, when the Russia-Ukraine conflict began;
14:55 CET Travel and transportation stocks were under pressure:
- Quotes of cruise Carnival, Norwegian Cruise Line and Royal Caribbean Cruises lost 5.9%, 4.7% and 4% on the premarket, respectively. Investors are concerned that rising risks could scare away travelers and that a jump in oil prices would hit profits, wrote CNBC.
- Air carriers that had to cancel or reroute flights on Friday are getting cheaper. Shares of United Airlines, Delta Air Lines and American Airlines fell more than 5% in morning trading.
- The share price of hotels and resorts fell as traders began to factor in weakening travel demand after the Israeli strikes. Hilton Worldwide lost 2 percent and Marriott lost 1.7 percent.
14:45 CET Amid falling futures on major U.S. indices, there are stocks that showed gains on the premarket:
- Quotes of energy companies rose amid a jump in oil prices. Chevron shares rose by 2.7% in morning trading in New York, Exxon Mobil - by 3%, ConocoPhillips - by more than 4.5%, EOG Resources - by 4.3%. Shares of Diamondback Energy jumped by 6%, and Occidental Petroleum - by 5%.
- Gold mining companies rose in price following the rise in prices for the metal itself, as investors rushed into protective assets amid geopolitical escalation. Quotes of Newmont and SSR Mining rose by 1.3% and 1.6%, respectively.
- Expectations of increased military spending supported defense contractors. Shares of RTX Corporation and Lockheed Martin added more than 3.5%, Northrop Grumman - more than 4%.
14:30 CET With an hour to go before the U.S. trading session opens, futures on the broad-market S&P 500 index and the Dow Jones Industrial Average are down about 0.9 percent, while contracts on the tech-heavy Nasdaq Composite are down a stronger 1.1 percent. The 1.3% drop in futures on the Russell 2000 index, which tracks small-cap securities, points to a particularly sharp decline in shares of companies focused on the U.S. domestic market, commented Reuters.
14:15 CET The Israeli operation against Iran's nuclear program and missile arsenal is far from over, The Wall Street Journal quoted a senior Israeli official as saying. At least 14 days of active measures had been planned, he said.
14:05 CET The VIX market volatility index, also called the «Wall Street fear index,» jumped more than 10 percent to cross the psychological 20-point mark typically indicating a period of heightened volatility and uncertainty.
13:55 CET Israel is in talks with the US administration to seek their participation in the operation against Iran, the Jerusalem Post's sources reported. US Secretary of State Marco Rubio earlier said the strikes were carried out «in full coordination» with Washington, but US military forces were not involved.
13:05 CET Iran's state television reported a new attack on the Natanz facility, the country's largest uranium enrichment center. Israeli Prime Minister Benjamin Netanyahu warned earlier that the strikes would continue for several days;
Iran is expected to respond with a missile attack and a new wave of drones, said an Israeli military official to Bloomberg news agency on condition of anonymity. He said Israeli air defense systems are still working and most of the Iranian drones have been intercepted.
12:50 CET Israel has ordered a temporary halt to production at Leviathan, the country's largest gas field, Bloomberg reports. The field is developed by Chevron and supplies fuel to Israel itself, Jordan and Egypt.
Depending on the duration of the pause, there could be consequences for the global gas market, the agency writes. Egypt is actively buying LNG to meet domestic demand, and any disruption in supplies from Israel could intensify this need and lead to a reduction in supply just as Europe is replenishing supplies for next winter.
Against this backdrop, European gas prices rose to 6.6%.
12:16 CET U.S. President Donald Trump has posted a harsh statement on the Truth Social network about the escalating conflict between Israel and Iran:
«I gave Iran chance after chance to make a deal. I told them - extremely firmly - 'just do it,' but no matter how hard they tried, no matter how close they came, they failed. I warned them that the consequences would be worse than they could expect or had been told, that the United States produces the best and most lethal military equipment in the world - UNLESS - and that Israel has plenty of it, and will have even more. And it knows how to use it.
Some Iranian radicals spoke bravely, but they didn't know what was in store for them. Now they are all DEAD, and it will only get worse from here! There has already been a tremendous amount of death and destruction, but it is not too late to stop this carnage - because the next attacks are planned, and they will be more brutal.
Iran must make a deal before all is lost and save what was once called the Iranian Empire. No more death, no more destruction. JUST DO IT BEFORE IT'S TOO LATE. God bless you!»
12:03 CET The International Energy Agency is actively monitoring how the situation between Israel and Iran affects oil markets, wrote IEA Executive Director Fatih Birol on social media X. «To date, markets are adequately supplied, but we are ready to take action if needed. The IEA's oil safety net has more than 1.2 billion barrels of emergency reserves and has already proven its importance in protecting the global economy,» the post reads,
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11:50 CET Reports are coming out of Iran of renewed Israeli strikes on the country, reports Times of India. According to Fars news agency, explosions have been heard near the northwestern city of Tabriz.
11:45 CET Analysts surveyed by Bloomberg are warning of risks to key shipping lanes in the Middle East. Tokyo-based shipping companies Nippon Yusen, Mitsui OSK Lines and Kawasaki Kisen Kaisha have advised their ships to exercise caution over the escalation between Israel and Iran. Other operators are expected to follow, the agency suggests.
Investors are betting on a possible boost to such companies' earnings from higher prices, with shares of Cosco Shipping Holdings and China Merchants Energy Shipping rising in Asia.
«The threat of war in the Middle East is having a significant impact on freight rates,» said Anoop Singh, head of shipping research at Oil Brokerage. - 'At the moment it is a risk premium: ship owners will avoid calls in the Persian Gulf until the situation returns to normal business activity'.
11:00 CET The Israel Defense Forces says it is «in control of the situation» after Iran launched drones towards Israeli territory. The Israel Air Force is shooting down the drones beyond the borders and so far none have reached the country, according to the report, which is quoted by the Times of Israel.
10:55 CET Four and a half hours before the opening of trading in the US, US stock futures show a significant decline. Futures on the technology index Nasdaq Composite are leading the decline, down 1.5 percent. However, this is slightly higher than it was in the early morning - the contracts managed to regain about 0.3 percentage points.
10:45 CET Israel has launched strikes on Iranian targets ahead of the sixth round of talks between the US and Iran on the nuclear deal - due to take place this weekend in Oman. There was no confirmation on Friday whether those plans were on track. After the fifth round, Orientalist Nikita Smagin wrote for Oninvest about the main issues the sides have so far failed to resolve. Among them is whether Iran can enrich uranium and guarantee the peaceful nature of its nuclear program;
10:25 CET European natural gas prices posted their strongest rise in more than five weeks, jumping 5.7 percent. About a quarter of the world's oil shipments and all of Qatar's LNG exports pass through the Strait of Hormuz. They have not been affected so far but could face delays if ships start avoiding the strait, Bloomberg notes.
«The risk to energy markets is a broader regional escalation involving major oil and natural gas suppliers,» said Rabobank core strategist Florence Schmit. She said Qatar, Oman and the UAE together have LNG export capacity of about 98 million tons a year, 18% of global supply. She said;
10:02 CET Airline securities, including IAG (owner of British Airways), EasyJet and Deutsche Lufthansa, were among the stocks that showed the biggest fall in the European market.
Air carriers are now diverting flights passing through the region. Dubai-based Emirates and FlyDubai canceled flights to and from Lebanon on Friday, according to Beirut airport. Israeli airline El Al has suspended departures from the country.
9:45 CET European stocks are down in early trading. The pan-European Stoxx 600 index is down 1 percent, with all sectors except oil and gas in negative territory. Germany's DAX is down 1.4 percent and France's CAC 40 is down 1.1 percent.
9:40 CET Iran's Armed Forces General Staff announced that there are now «no limits» to responding to Israeli strikes.
In parallel, the IDF reported a «powerful strike» against Iran's air defense systems in the west of the country and published a video of one such strike. According to the statement, dozens of radars and anti-aircraft missile launchers were destroyed.
9:25 CET «If the escalation continues, there is a risk of disruption to shipping through the Strait of Hormuz,» Warren Patterson, head of commodities strategy at ING Groep NV in Singapore, said. - That's an extreme scenario, but it could jeopardize the roughly 14 million barrels of oil per day passing through the strait. A significant disruption to those supplies could well push prices up to $120 a barrel.»
Earlier this week, JPMorgan warned that in a worst-case scenario in the Middle East, the price of oil could reach $130 a barrel.
9:05 CET Israel's attack on Iran's nuclear program caught markets by surprise, triggering a surge in prices of assets traditionally considered protective in times of heightened volatility, writes CNBC.
«The news raised serious concerns about escalation and broader regional conflict,» Deutsche Bank strategists said in a Friday morning note. - The aftermath of the attack reverberated across global markets, triggering a sharp risk-off in several asset classes at once.»
- The gold price jumped almost to a two-month high, but then lost some of its gains. As of 8:42 CET, the spot price of the metal was up 1.1% to $3420.24 per ounce. Gold futures for August delivery were up 1.3% to $3446.
- US Treasury bond prices also rose, which led to a decline in yields. Yields on 30-year, 10-year and 2-year treasuries fell by about 3 basis points. However, these changes are relatively small compared with the volatility seen this year, Bloomberg said.
- All three currencies, which are traditionally considered defensive, strengthened. The U.S. dollar index, which measures the exchange rate against a basket of major currencies, rose 0.36%. The Swiss franc and Japanese yen appreciated against the dollar early Friday morning, but then retreated.
- The cryptocurrency market has not confirmed its «safe haven» status, Bloomberg notes.
8:55 CET Israeli Air Force fighter jets have begun shooting down drones fired from Iran, the Times of Israel reports. According to an army spokesman, the interceptions are taking place outside Israeli territory. Those drones that are not destroyed in advance are expected to reach Israel within an hour. Jordan's state media reports that the country has intercepted several drones that violated its airspace.
8:50 CET The most notable movement, aside from the oil market, was a heavy drop in U.S. stock futures, which was more pronounced than in most global markets, notes Bloomberg. This could be because the U.S. is where most of the «weak hands»-participants who recently opened long positions and are willing to quickly close them at the first sign of risk-are concentrated, the agency suggests. Another hypothesis, which it cites: American investors may be laying in prices the scenario of a large-scale conflict in the Middle East with global consequences.
8:40 CET The oil market is alarmed by recent developments, Barclays analysts confirmed in a Friday note, quoted by CNBC. They emphasized that «the worst-case scenario is still far from being reflected in the current price,» and pointed to the lingering uncertainty of whether Saudi Arabia or other regional players supported Israel in the attacks.
At the moment, the price of Brent crude oil is up 7.4% to $5.08 per barrel, while the price of WTI has jumped 7.8% to $5.3 per barrel.
8:25 CET European stocks appear set to follow global markets amid the escalating situation in the Middle East, CNBC predicts. Futures on the pan-European Stoxx 600 index show a 1.2 percent decline, while futures on Germany's DAX index are down 1.7 percent. Britain's FTSE 100, which closed at a record high on Thursday, is also likely to open lower, with futures for it down 0.5%.
8:10 a.m. CETWe re showing that while worst-case scenarios on duties have receded, markets are still facing high geopolitical uncertainty, said Bloomberg chief economist at Westpac Banking Lucy Ellis. «There's also a bit of near-term inflation risk amplification through higher oil prices,» she said. Read more of the analysts' initial comments -here.
7:46 CET Tehran has fired 100 drones in response to an Israeli attack on Iranian nuclear facilities, the Israeli army said, Bloomberg reports. The drones may take several hours to cover the distance to Israel, and they also fly at low altitude and are highly likely to miss their targets, the agency said;
