Global markets: gold and oil are rising, stocks are slipping as trade with the US and Iran is under threat



By Wayne Cole and Swati Pandey

SYDNEY (Reuters) – An indicator for Asian stocks plummeted from an 18-month high on Monday as tensions in the Middle East prompted investors to look for the security of gold.

The United States noted that Iranian missile forces were on the heel of alarm when President Donald Trump warned the United States that it would "possibly disproportionately" strike back if Iran attacked an American person or target.

The Iraqi parliament recommended expelling all foreign troops from the country on Sunday after the United States killed an Iranian commander in chief and an Iraqi militia leader.

Spot gold rose 1.5% to $ 1,579.55 an ounce in troubled trading, peaking since April 2013.

The price of oil, which contributes to fears that a conflict in the region could affect global supplies.

Brent crude futures rose $ 1.46 to $ 70.06 a barrel, while US crude rose $ 1.17 to $ 64.22.

"The risk of further escalation has increased significantly given the direct attack on Iran, the threat of retaliation by Iran and Trump's will to look tough – and threatens higher oil prices," said Shane Oliver, chief economist at AMP Capital.

"Historically, oil prices have to double in order to seriously jeopardize global growth, and we are a long way from that."

MSCI's broadest Asia Pacific non-Japanese equity index fell 0.7%.

The Japanese Nikkei fell almost 2% on a poor holiday return, while the E-mini futures for the S & P 500 fell 0.5% in very unstable trading.

Chinese equities also rose in the red, with the CSI300 index easing slightly and Australian equities down 0.4%.

"Geopolitical tensions appear to remain high in the coming days, which will support oil prices and keep the risk assets markets on the defensive," said Ray Attrill, head of FX strategy at National Australia Bank.

Government bonds benefited from the security offer with yields on 10-year government bonds of 1.769% after falling 10 basis points on Friday. Treasury futures won 5-1 / 2 ticks.

In the currency markets, the Japanese yen remained the preferred safe haven thanks to the massive Japanese holdings of foreign assets. Investors believe that Japanese funds would repatriate their money during a real global crisis and drive the yen higher.

The dollar was last at 107.98 yen on Monday after falling to a three-month low of 107.78 at the start of the session. The euro also fell to 120.55 yen after hitting a three-week low.

The dollar remained more stable against the other majors, and the euro changed only slightly at USD 1.1111. The dollar was at 96.86 against a basket of currencies.

The risk-sensitive currencies of Australia and New Zealand were on their way to their fourth consecutive loss session.

(Edited by Sam Holmes)