US futures decline on Iran fallout; brent crude hits $70

Bloomberg

Stocks extended their losses on Monday and oil built on gains as investors continued to grapple with the aftermath of a US airstrike that killed a powerful Iranian general. Gold surged to the highest in more than six years.
Futures for the main American equity gauges retreated for a second session after Iran said over the weekend it would no longer abide by any limits on its enrichment of uranium. President Donald Trump said the US had identified 52 Iranian sites it would hit if Tehran retaliates. The Stoxx Europe 600 Index also dropped after most shares in Asia declined.
The yen matched a three-month high before erasing its gains, and Treasuries edged higher following last week’s jump. Brent crude at one point traded above $70 a barrel for the first time since September before trimming some of its jump. The euro strengthened after data showed the region’s economy edged away from stagnation at the end of 2019, and the pound climbed after better-than-forecast UK services sector numbers.
The sudden escalation of tension in the Middle East continues to damp the enthusiasm that sent the S&P 500 Index to a record on its first trading day of the year. Investors looking ahead to the planned signing of a US-China phase-one trade deal later this month were rattled by the American strike
on Iranian General Qassem Soleimani, which served as a reminder that markets remain vulnerable to geopolitics.
“Everyone got comfortable in that fact that the truce in the trade war had come through and the outlook for 2020 looked a little bit better and then we had another geopolitical reminder come through,” said Suncorp Group Financial Market Strategist Peter Dragicevich. “It’s going to be a big driver of markets in the short term.”
In the latest developments, Trump doubled down on threats to Iran and vowed to slap sanctions on Iraq if US troops were expelled from
the country.
Federal Reserve officials Richard Clarida, John Williams, James Bullard and Charles Evans speak on Thursday.
The US monthly employment report is due on Friday.
Futures on the S&P 500 Index decreased 0.6% in New York. The Stoxx Europe 600 Index sank 1%. The MSCI Asia Pacific Index fell 1%. The MSCI Emerging Market Index dropped 1%.
The Bloomberg Dollar Spot Index fell 0.3%. The euro climbed 0.4% to $1.1203. The British pound jumped 0.6% to $1.3163. The onshore yuan decreased 0.1% to 6.971 per dollar. The Japanese yen was little changed at 108.04 per dollar.
The yield on 10-year Treasuries dipped one basis point to 1.78%. The yield on two-year Treasuries climbed less than one basis point to 1.53%. Germany’s 10-year yield sank one basis point to -0.29%. Britain’s 10-year yield gained one basis point to 0.749%.
Japan’s 10-year yield fell one basis point to -0.02%. West Texas Intermediate crude increased 1.3% to $63.86 a barrel. Iron ore climbed 0.4% to $92.89 per metric ton.
Gold surged 1.6% to $1,577.08 an ounce.