Stocks Slide, Bonds Advance With Oil After Attack: Markets Wrap

(Bloomberg) -- U.S. stocks slipped, oil surged and investors sought out assets considered to be havens in times of trouble after a strike on Saudi Arabia’s crude production heightened geopolitical risk.

Losses for automakers helped drag the S&P 500 Index down the most in almost two weeks, though the gauge came off its lows of the day in afternoon trading. Treasuries yields fell the most in three weeks. Brent oil posted a record intraday jump, adding as much as 19%, as news of the devastating strike on the world’s largest exporter also sent currencies of commodity-linked nations higher, including Canada’s dollar.

The developments in the Middle East are testing sentiment after a bullish start to the month for global equities and other riskier assets. President Donald Trump promised to help allies following the infrastructure attack after stating over the weekend that the U.S. is “locked and loaded.” Several administration officials said Sunday that they had substantial evidence that Iran was to blame, not the Iranian-backed Houthi rebels in Yemen who claimed responsibility.

“You’re seeing the oil and gas stocks up because of supply-demand, but you’re seeing the rest of the market falter because of that uncertainty over how it’s going to affect the consumer going forward,” said Carter Henderson, portfolio specialist at Fort Pitt Capital Group, which has more than $2 billion in assets under management. “There’s a lot of things going on around the globe that we need to pay attention to.”

Elsewhere, the pound retreated after no signs of progress in Prime Minister Boris Johnson’s first face-to-face meeting on Brexit with European Commission President Jean-Claude Juncker. The Stoxx Europe 600 Index fell the most in three weeks.

Shares in Asia were mixed after China data missed estimates, with Hong Kong equities underperforming, while those in South Korea rose after a holiday. Japanese markets were closed.

These are some key events to keep an eye on this week:

• The Federal Reserve is widely expected to lower U.S. interest rates in response to slowing global economic growth and muted inflation. Chairman Jerome Powell will hold a post-decision press conference Wednesday.
• The Bank of Japan monetary policy decision is on Thursday, followed by a briefing from Governor Haruhiko Kuroda.
• Bank Indonesia and Bank of England also decide policy on Thursday.
• Australia jobs figures are out Thursday.
• Friday is quadruple witching day for U.S. markets. When the quarterly expiration of futures and options on indexes and stocks occurs on the same day, surging volatility and trading can follow.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.3% at the close of trading in New York.
• The Stoxx Europe 600 Index sank 0.6%.
• The MSCI Emerging Markets Index slipped 0.1%.

Currencies

• The Bloomberg Dollar Spot Index climbed 0.3%.
• The euro decreased 0.6% to $1.1006.
• The British pound sank 0.6% to $1.2427.
• Canada’s dollar rose 0.3% to $0.7549.
• The Japanese yen was little changed at 108.06 per dollar.

Bonds

• The yield on 10-year Treasuries sank six basis points to 1.84%.
• Germany’s 10-year yield fell three basis points to -0.48%.
• Britain’s 10-year yield fell seven basis points to 0.69%.

Commodities

• West Texas Intermediate crude jumped 13% to $61.73 a barrel, near a four-month high.
• Silver added 2.6% to $17.89 an ounce.
• Gold climbed 0.7% to $1,499.01 an ounce.

--With assistance from Adam Haigh, Andreea Papuc, Yakob Peterseil, Laura Curtis and Samuel Potter.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Brendan Walsh in Austin at bwalsh8@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

©2019 Bloomberg L.P.