9.55am: Widespread selling at the open
Wall Street has opened sharply lower, with heavy selling across the board in early trade.
The Dow Jones is down over 1,000 points or 2.3% at 47,843, while the Nasdaq has dropped 2.2% and the S&P 500 has fallen 2.1%.
The small-cap Russell 2000 is off 3.1% after almost 30 minutes into the session.
All but one of the Dow is in the red, with Verizon the exception. Biggest fallers on the blue-chip index are Caterpillar, down 4.6%, Sherwin-Williams, down 3.6%, Goldman Sachs, down 3.2% and Boeing, down 3%.
On the Nasdaq 100, Western Digital, Micron, Intel, Seagate, Ferrovial, ARM, and ASML were all down over 5%.
‘Mag 7’ giants Nvidia, Alphabet, Amazon and Tesla are all down around 2%, with Apple and Microsoft down less than 1%.
8.15am: Iran fighting latest
US and Israeli fighter jets have continued air strikes across Iran, while Israeli troops have entered Lebanon.
US embassies in Saudi Arabia and Kuwait have been temporarily shuttered after retaliatory drone attacks from Iran.
Americans in the region were urged to “depart now”, with nonemergency personnel in six Gulf states ordered to leave.
Israel’s air force said it was attacking both Tehran and Beirut with “extensive strikes” against the Iranian regime and Hezbollah.
President Trump, meanwhile, said in a social media post that it is “too late” for talks with Iran.
“Their air defense, air force, navy, and leadership is gone,” Trump wrote in a short Truth Social post this morning. “They want to talk. I said ‘Too Late!’”
Iran’s top national security official yesterday also rejected the idea of talks, following the assassination by missile of Ayatollah Ali Khamenei.
In the Gulf, Qatar’s state-owned energy company has announced it is halting production on some downstream products including urea, polymers, methanol and aluminum.
The company previously announced that it had halted production of liquefied natural gas (LNG) after attacks on facilities in Ras Laffan and Mesaieed. QatarEnergy is one of the biggest producers of LNG in the world.
7.25am: Nasdaq set to lead sharp fall as markets take Iran conflict more seriously
Wall Street equity investors looked more rattled ahead of Tuesday’s session, as global markets moved firmly into risk-off mode as the conflict widened in the Middle East.
Tech stocks were set to take the brunt of selling, after shugging off the US and Israel’s strikes on Iran at the start of the week.
Futures for the tech-heavy Nasdaq were down 2.1% ahead of Tuesday’s open, with S&P 500 and Dow Jones futures both down around 1.7%.
Nvidia was down 2.7% in pre-market trading, while names like Micron and Seagate down over 4% and SanDisk 6.2% lower. Airlines were also heading for a fall, as flights to the region look set to be cancelled for the foreseeable.
Investors are coming into US markets on the back foot after mounting global uncertainty about the war in Iran led to sharp selling in Europe and Asia.
London’s FTSE 100 slumped 2.5%, with the German DAX plunged 3.7%, while in Asia, the Korean Kospi plummted 7.2%, Japan’s Nikkei dropped 3.1% and in China the Shanghai Composite fell 1.4%.
The slide reflected renewed concern about geopolitical tensions and their effect on risk assets, pushing energy and commodity prices higher and weighing on more cyclical stocks.
Oil prices continued to climb, with WTI jumping another 7.3% to $76.38 a barrel, the highest since the start of last year, though gold and silver prices softened.
Inflationary impact of Iran conflict
“Markets are being hit hard, as the full inflationary impact of the war in Iran truly comes home to roost,” said market analyst Joshua Mahony at Scope Markets.
According to Bloomberg, a sustained $10 increase in oil could add 0.2-0.5% to CPI and drive GDP 0.1-0.3% lower, with a bigger impact if crude hit $100.
“Coming off the back of a period where precious metals seemed to be the only game in town, the rise in the US dollar and surging inflation expectations have dented sentiment for gold and silver despite the geopolitical concerns,” Mahony added.
Oil and natural gas prices were being hit by the recent removal of insurance coverage for ships passing through the Straits of Hormuz, effectively closing the key shipping lane.
“While the US claims that the Straits of Hormuz remains open following the destruction of much of the Iranian Navy, the cancellation of insurance coverage and Iranian threats of that ships will be set ablaze for passing through the passage mean that journeys have slowed to a trickle,” Mahony noted.
“This means that oil prices are likely to rise as long as this conflict rages on, with this key bottleneck proving to be one of Iran’s most important points of leverage as they seek to pressure the US President through higher inflation and destruction of key facilities for US allies in the region.”
