Wall Street’s “Fear Gauge” has shot up after Israel vowed to respond to Iran’s first ever direct attack.
European markets were mired in red as stocks plunged amid a global sell-off of equities after top Israeli military officials said their country had no choice but to respond to Tehran’s barrage of more than 300 missiles.
Wall Street, which sank on Monday, is tipped to open higher this afternoon. But traders are bracing for further turbulence, with the US’s so-called “Fear Gauge” — the Chicago Board Options Exchange Volatility Index — shooting up by more than a quarter over Friday and Monday to the highest since late October, several weeks after the initial Hamas attack on Israel.
It comes as the FTSE 100 plunged by as much as 1.6pc, while Germany’s Dax fell 1.5pc and France’s Cac 40 sank 1.8pc amid fears the rising tensions in the Middle East could disrupt global supply chains.
Markets have also been hit by stronger-than-expected US retail sales data on Monday, which further reinforced the view the Federal Reserve may not rush to cut interest rates this year.
Traders now anticipate around 45 basis points of cuts this year, down from more than 160 bps in expected cuts at the start of the year. Markets are now pricing in September, instead of June, as the starting point for rate cuts, according to CME FedWatch Tool.
Brent crude oil climbed back above $90 a barrel after it hit a six week high last week and despite Foreign Secretary Lord Cameron and US President Joe Biden urging restraint from Israel. It has since dropped back below £90.
While air defence systems destroyed the vast majority of the missiles fired by Iran and Tehran said “the matter can be deemed concluded”, Israel’s army chief General Herzi Halevi sounded a note of warning, fuelling worries of a dangerous escalation.
He told troops at the Nevatim military base, which was hit in Iran’s Saturday barrage: “This launch of so many (Iranian) missiles, cruise missiles, and UAVs into the territory of the State of Israel will be met with a response.”
However, he added that the military would not be distracted from its war against Hamas in Gaza.
Warren Patterson, head of commodities strategy for ING, said the prospect of a response by Tel Aviv “means that this uncertainty and tension will linger for quite some time”.
Read the latest updates below.
https://news.google.com/rss/articles/CBMibGh0dHBzOi8vd3d3LnRlbGVncmFwaC5jby51ay9idXNpbmVzcy8yMDI0LzA0LzE2L2Z0c2UtMTAwLW1hcmtldHMtbGF0ZXN0LW5ld3Mtb2lsLXByaWNlLWlzcmFlbC11ay1lbXBsb3ltZW50L9IBAA?oc=5
2024-04-16 12:34:58Z
CBMibGh0dHBzOi8vd3d3LnRlbGVncmFwaC5jby51ay9idXNpbmVzcy8yMDI0LzA0LzE2L2Z0c2UtMTAwLW1hcmtldHMtbGF0ZXN0LW5ld3Mtb2lsLXByaWNlLWlzcmFlbC11ay1lbXBsb3ltZW50L9IBAA
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