Risk Off on Israel Iran War Fears
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How did Iran’s missile launch into Israeli airspace trigger the initial risk‑off market reaction?
Iran has been firing rockets into Israel, although Israeli defenses were too strong for them, it seems. But there could be retaliation nonetheless. So markets, which were strongly risk-off, lurched back a little as the missile stopped. But who knows where from here. But even before that, it was a fairly busy session with the job openings numbers in the United States and the manufacturing ISM. Europe got its inflation numbers. Australia had retail sales. We'll look at all All of that plus bigger cuts now expected from the RBNZ. It's Wednesday, it's the 2nd of October 2024. It's the morning call from NAB. Well, the US dollar was half a percent higher. It is back a little from that now. The Aussie is down by a quarter percent, just below sixty-nine US cents.
The euro is down more than half a percent.
Why did US Treasury yields and equity markets fall after the geopolitical shock?
Bond yields are falling, reversing yesterday's moves up. So ten-year Treasury is down four basis points, down nine for ten-year bond yields in Germany, down ten in France, and six in the UK. Aussie ten years were up three basis points to four percent yesterday. Overnight on futures down four basis points off that. And US equities are well down. A 0.4% lower for the Dow, a 0.9% fall for the SP, and 1.5% lower for the Nasdaq and the Russell 2000. In Europe, well, their markets closed really before we saw these tensions rising in the Middle East, but a 0.9% fall in the Eurostocks 50, a half percent gain in the FTSE 100, and another 8.5%. percent added yesterday to the CSI 300. And as you might imagine, as the uh prospect of a broader war in the Middle East ratchet is up, big moves up in oil.
So WTI and Brent both up three percent this morning. Brent is now edging closer to seventy-four barrels. Spot gold is up one point one percent as well. It did get up to two thousand six hundred and seventy three in this session, which is not quite an all-time high, but it's not far off it. So Nab Sky Masters joins me from Sydney. The big news on overnight obviously is that Iranian attack on Israel, but it's uh just a matter of time before Israel does respond. We can assume that Iran's oil assets will be on the uh the the target list for that, and they account for uh, you know, from the numbers I'm seeing, three percent of the world's oil supply. Although of course, with US sanctions on them, no one should be buying from them.
But obviously that's not stopping China and others. Uh, but we'll see how that plays out. And of course then not to mention the volatility that we'll now see in the Red Sea as well, because of the reports of the Houthis attacking two vessels there overnight. So, I mean, th th there's a possibility now that this is gonna be a a broader war. How are the markets gonna respond to that and how have they been responding overnight?
Yeah, good morning Phil. Look in terms of um market price action overnight, it was a real classic risk off trading session early on in the session on on the news reports of of the Iranian attacks. You had um, you know, as you've already mentioned, oil price headed higher. So WTI um peaked in the session at around US dollar seventy two dollars a barrel, up from um it had started the session at around six. sixty six dollars. US ten year bonds rallied. Um they touched at intercession low of three sixty nine.
What impact did the missile incident have on oil prices and global energy markets?
That was from a level of of um three seventy nine earlier in the session. Um reports were that um Iran had fired around two hundred missiles at at Israel. Um most of these were said to be intercepted with American warships reported to um be assisting in in intercepting um in intercepting those missiles. And we recall the last time we had such um action like this was back in back in April. This feels this feels more This feels this feels
more significant than April though, doesn't it? In that it's it feels as though there's going to be more retaliation and this is the first step to something bigger. But I mean it's but the I guess the g the question is what does it really mean, even if there is uh increased uh activity in that part of the world, I guess it's oil I mean oil supplies are the question, aren't they?
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Chapters
7 chapters
1
How did Iran’s missile launch into Israeli airspace trigger the initial risk‑off market reaction?
0:01–0:47
2
Why did US Treasury yields and equity markets fall after the geopolitical shock?
0:47–3:07
3
What impact did the missile incident have on oil prices and global energy markets?
3:07–6:19
4
How are the latest US manufacturing ISM and job‑openings (JOLTS) figures influencing Fed expectations?
6:19–9:49
5
What does the Australian retail‑sales surprise mean for consumer spending and the RBNZ rate‑cut outlook?
9:49–13:16
6
How might the emerging dock‑worker strike on US coasts affect trade flows and inflation?
13:16–15:52
7
What are the implications of Europe’s CPI data and the ECB’s potential rate move?
15:52–16:11