US stocks slip, bonds surge with crude on Saudi attack

Bloomberg

US stocks slipped, oil surged and assets considered to be havens in times of trouble climbed after a strike on Saudi Arabia’s crude production heightened geopolitical risk.
A drop in automaker shares helped drag the S&P 500 Index down the most in almost two weeks, even as energy producers climbed. Treasuries advanced with precious metals and the yen. Brent oil posted a record intraday jump, soaring as much as 19 percent before paring gains, as news of the devastating strike on the world’s largest exporter also sent currencies of commodity-linked nations higher, including Canada’s dollar.
The developments in the Middle East are testing sentiment after a bullish start to the month for global equities and other riskier assets. President Donald Trump promised to help allies following the infrastructure attack after stating over the weekend that the US is “locked and loaded.”
Several administration officials said that they had substantial evidence that Iran was to blame, not the Iranian-backed Houthi rebels in Yemen who claimed responsibility.
“You’re seeing the oil and gas stocks up because of supply-demand, but you’re seeing the rest of the market falter because of that uncertainty over how it’s going to affect the consumer going forward,” said Carter Henderson, portfolio specialist at Fort Pitt Capital Group, which has more than $2 billion in
assets under management. “There’s a lot of things going on around the globe that we need to pay attention to.”
Elsewhere, the pound retreated as Prime Minister Boris Johnson held his first face-to-face meeting on Brexit with European Commission President Jean-Claude Juncker.
The Stoxx Europe 600 Index fell. Shares in Asia were mixed after China data missed estimates, with Hong Kong equities underperforming, while those in South Korea rose after a
holiday. Japanese markets were closed.
The Federal Reserve is widely expected to lower US interest rates in response to slowing global economic growth and muted inflation. Chairman Jerome Powell will hold a post-decision press conference on Wednesday.
The Bank of Japan monetary policy decision is on Thursday, followed by a briefing from Governor Haruhiko Kuroda.
Bank Indonesia and Bank of England also decide policy on Thursday.
Friday is quadruple witching day for US markets. When the quarterly expiration of futures and options on indexes and stocks occurs on the same day, surging volatility and trading can follow.
The S&P 500 Index decreased 0.4 percent in New York. The Stoxx Europe 600 Index sank 0.6 percent. The MSCI Emerging Markets Index was little changed.
The Bloomberg Dollar Spot Index climbed 0.2 percent. The euro decreased 0.6 percent to $1.1009. The British pound sank 0.6 percent to $1.2424. Canada’s dollar rose 0.4 percent to $0.7552. The Japanese yen climbed 0.1 percent to 107.98 per dollar.
The yield on 10-year Treasuries sank six basis points to 1.84 percent. Germany’s 10-year yield fell three basis points to -0.48 percent. Britain’s 10-year yield fell seven basis points to 0.69 percent.
West Texas Intermediate crude jumped 12 percent to $61.18 a barrel, a two-month high.