Iran’s Missile Attack Moved the US and Asian Financial Markets

Last modified: January 8, 2020

On Wednesday, Iran fired missiles at US forces stationed in Iraq, indirectly affecting the global financial markets — Asian stocks and US treasury yields slid down and oil prices increased. 

The missile attack of Iran was an act of retaliation against the killing of the Iranian commander via a drone strike from the US. After the missiles were fired, concerns about how the US would respond arose. By early afternoon, exaggerated moves in Asian equities and US bonds were seen. 

According to James McGlew, an executive director of corporate stockbroking in Perth, changes in the financial markets were clearly induced by volatility. He also added that the markets could “price” risk, but not uncertainty. 

Meanwhile, Trump tweeted that he would make a statement regarding the attacks. He also stated that assessments of both the damages and casualties sustained by these strikes were already underway. 

The US claimed that it wasn’t aware of any US casualties as a result of said strikes. Nevertheless, if casualties are found, Trump would probably fight back. Others have forecasted the coming of World War III but it seems like the current situation is still far from that kind of scenario, said Matt Simpson, a senior market analyst (Gain Capital — Singapore).

The impact of the strikes was evident in the financial sector — China’s blue-chip CSI300 index lowered by 0.48%, Japan’s Nikkei was down 1.29%, and US S&P 500 stock futures went down by 0.28%. 

A chief economist in the Asia-Pacific region, Rob Carnell, shared his insights into the issue. He said that if the tension between the US and Iran escalates, it could result in a longer negative market reaction. Other analysts agreed, saying that tensions in the Middle East would likely keep financial markets on edge. 

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