Asian stocks to fall after Iran attack: Market Roundup

(Bloomberg) - Asian stocks are set to fall Monday as tensions mount in the Middle East following Iran's unprecedented weekend attack on Israel.

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Equity futures in Australia, China and Japan closed lower in the morning after U.S. stocks shied away from Iran in anticipation of a strike, posting their worst performance since January on Friday. The yen and Swiss franc, historically regarded as so-called safe-haven currencies, were higher early Monday. Oil was steady at the Asian open, while gold rose 0.7%.

Investors are already reeling from the prospect of higher inflation and longer-term interest rates, and the escalation of the Middle East crisis has injected new turbulence into the market. Many believe the price of oil could top $100 a barrel as the crisis widens, with investors expected to switch to treasury bonds, gold and the dollar, and stocks expected to fall further.

Although Iran has said that it "can consider the matter closed", traders are now waiting for Israel's response and whether the confrontation will turn into a wider regional war. However, reports that the President of the United States of America, Joe Biden, told the Israeli Prime Minister of Agriculture, Benjamin Netanya, that the United States would not support Israel's counterattack against Iran may ease the tension in the market.

"For the market, this could eventually turn into a retreat as Iran and Israel retreat from the brink," says Namik Immelbäck, head strategist at Skandinaviska Enskilda Banken AB. But in the short term, this should lead to a reduction in positions, especially in trend-following quantitative strategies," he says, "which should exacerbate the typical flight to safety.

Read More Iran's Attack on Israel Sparks Race to Avoid All-Over War

Bitcoin sank nearly 9% after Saturday's attacks before rebounding to trade near $64,000. Stocks in Saudi Arabia and Qatar fell slightly amid thin trading volumes on Sunday. Israel's stock benchmark fluctuated between gains and losses at least nine times before closing slightly higher.

Oil will be closely watched as investors look to it as a guide for how to respond to the risk of a strike and counter-strike cycle. Brent crude has risen nearly 20% this year and last traded above $90 a barrel.

In the bond market, investors will weigh the risk that more expensive energy bills could exacerbate inflation concerns. While Treasuries tend to benefit in times of uncertainty, the threat of high interest rates may limit their strength.

Some of the major trends in the market:

Currency

• The yen rose 0.1% to 153.07 yen per dollar as of 6:52 a.m. Tokyo time.

• EUR down 0.1% to $1.0635

• AUD flat at 0.6467 USD

• Swiss franc up 0.1% to $0.9132

Encryption Currency

• Bitcoin down 0.2% at $63,733.98

• Ether down 0.1% to $3,064.89

stock (market)

• Hang Seng Index futures fell 1.7 percent on Friday.

• S&P/ASX 200 futures down 0.6 percent

• Nikkei 225 Index futures down 1.8 percent

debentures

• The yield on 10-year government bonds fell 6 basis points to 4.52 percent.

bulk commodities

• West Texas Kerosene Intermediate crude oil was little changed at $85.56 per barrel.

• Spot gold rose 0.7% to $2,360.97 per ounce.

This story was produced with the help of Bloomberg Automation.

-Written with the help of Michael G. Wilson.

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