Risk aversion intensified after Israel launched a retaliatory strike on Iran
Wall Street stocks finished mixed-to-lower on Thursday as investors continued to give up on hopes that the Federal Reserve will deliver a cut to interest rates in June amid strong economic data. By the way, a fresh report showed that fewer workers applied for unemployment benefits last week than expected in another sign that the job market remains resilient despite elevated interest rates. As such, the S&P 500 fell 0.2% to mark a fifth straight loss, which is the longest losing streak since October. The Dow Jones Industrial Average edged up 0.1%, and the Nasdaq Composite slipped 0.5%.
In Asia, equities plunged on Friday, as tensions in the Middle East were weighing on sentiment across the region. In particular, risk aversion intensified after Israel launched a retaliatory strike on Iran less than a week after Tehran’s rocket and drone attack. Leading losses in the region, Japan’s Nikkei 225 slumping 2.5% on aggressive selling of semiconductor-related shares. On the data front, Japan’s core inflation moderated to 2.9%, marking the first time since November 2022 that the index fell below 3%. Elsewhere, the Shanghai Composite edged down 0.29%, Hong Kong’s Hang Seng declined 1.15% and Australia’s S&P/ASX 200 dipped 0.98%.
Fresh conflict in the Middle East sent haven assets including Treasuries and the dollar higher earlier in the day. The USD index briefly climbed to the 106.35 zone before retreating amid some profit-taking in recent trading. The greenback has settled just above the 106.00 figure, staying elevated despite the lack of bullishness at this stage. Should the dollar fail to hold above 106.00 during the upcoming session, the US currency will finish the week lower after last week’s rally.
Meanwhile, gold prices jumped back above the $2,400 zone amid safe-haven demand. The XAUUSD pair briefly exceeded the $2430 zone before paring gains. The bullion has settled around the $2400 figure, retaining modest bullish bias and looking to finish another week with solid gains. On the downside, a failure to hold above $2,400 would pave the way towards the $2,370 zone that represents the immediate significant support at this stage. However, the yellow metal is likely to stay elevated in the near term.