Middle East tensions weigh on markets

Global oil and gold prices have shot higher today as worries mounted about the conflict in the Middle East widening.

The tensions overshadowed the start of US corporate earnings season, with Wall Street stocks sliding despite banks beating expectations.

“Geopolitical worries have triggered some risk aversion, but worries about a growth slowdown have presumably triggered some residual angst about corporate earnings not living up to expectations,” says Briefing.com analyst Patrick O’Hare.

Oil prices were up more than two percent as regional tensions soared after Iran threatened reprisals over a strike in Syria this month that killed two Iranian generals.

Gold also benefited from its status as a haven investment, breaking the $2,400 per ounce level to set a fresh record.

“US stocks are falling, and gold is rising in risk-off trade as fears rise that the Israel-Hamas war could escalate if Iran directly attacks Israel, which could happen this weekend,” says Fiona Cincotta at City Index.

Investor attention had been set to focus on Friday’s start of the corporate earnings season after economic data released earlier this week largely killed off the possibility that the US Federal Reserve could begin cutting interest rates in June.

Equity markets took the recalibration of expectations of interest rate cuts in stride, as data showing the US economy in strong health raised hopes that companies will keep reporting strong earnings.