U.S. Futures Turn Higher as Trader Nerves Settle: Markets Wrap

LAGOS (Capital Markets in Africa) – Futures on the benchmark U.S. stock gauge turned positive on Wednesday, recovering from a plunge after Iranian missiles struck two American military bases in Iraq. Gold, Treasuries, and oil pared earlier out-sized gains as Iran stressed it didn’t seek war.

Contracts on the S&P 500 erased all losses through the European morning to trade in the green after Donald Trump declared “so far so good” regarding an early damage assessment. The U.S. president plans to make a statement later Wednesday. Boeing Co. shares slipped in pre-market trading after one of its 737s crashed after take-off in Iran, with early assessments suggesting the incident was caused by a technical issue. The Stoxx Europe 600 Index erased most of an earlier decline.

All major Asian equity markets fell earlier. A gauge of high-yield credit risk in Europe rose to the highest in about a month. Gold punched above $1,600 an ounce for the first time since 2013 before the move eased.

Wednesday’s swings mark the latest bout of volatility sparked by U.S.-Iran tensions, as investors try to assess how far the situation will escalate. The nervousness is denting optimism spurred by the improving outlook for global commerce, with a Sino-American trade deal expected to be signed next week. While manufacturing remains weak, job markets are solid across major economies.

The missile attacks “triggered a short period of market volatility overnight but FX and bond moves have largely been reversed,” Kit Juckes, the chief currency strategist at Societe Generale SA in London, wrote in a note. “The consensus view is still that major escalation is unlikely.”

Elsewhere, European bonds were mostly steady after the region’s market for new issues saw investors place orders for three times as much debt as the amount being sold on Tuesday. The euro dropped as German manufacturing orders unexpectedly fell in November.

Source: Bloomberg Business News