European stocks fell Tuesday after Israel’s military chief vowed to respond to Iran’s attack on his country, while Wall Street stocks meandered before ending virtually flat.
Heavy losses in Asia spilled over into European trading, while Wall Street’s main indexes ended a choppy session with little change.
Federal Reserve Chairman Jerome Powell said bringing inflation under control could take “longer than expected” following recent economic data that pushed back expectations for lower interest rates.
Israel and Iran have exchanged threats after Tehran’s first-ever direct attack on its archenemy over the weekend sharply increased regional tensions, as the war in Gaza continues with no truce in sight.
“Sentiment is fragile at best right now with heightened geopolitical tensions in the Middle East, adding to growing concerns that the Federal Reserve may choose to keep interest rates at current levels for some time to come,” noted analyst Joshua Mahony of Scope Markets.
Tehran fired hundreds of missiles and drones at Israel on Saturday, saying the attack was retaliation for an alleged April 1 Israeli strike on the consular annex of its embassy in Damascus that killed seven Revolutionary Guards, including two generals.
As air defense systems destroyed the vast majority of the dam and Iran declared that “the matter can be considered settled”, Israeli army chief General Herzi Halevi warned that there would be a response, fueling fears of escalation.
“The key for markets now will be the scale of retaliation,” said Matthew Ryan, head of market strategy at financial services firm Ebury.
“If Israel continued its equally ambitious missile attacks or, in the worst case scenario, if other countries became embroiled in the conflict, notably the United States, we would likely see a flight to safety in the markets.
“The threat to global oil supplies would also likely trigger a sharp rise in oil prices, which could comfortably climb above $100 a barrel if investors fear a broader regional war.”
But oil prices largely ignored this new rhetoric, ending up little changed.
– Mixed data for China –
In Asia, traders digested figures showing China’s expansion beat expectations in the first three months of the year, but retail and industrial data were well below normal, which suggests that leaders have a lot of work to do to revive growth.
Investors appear to be ignoring figures showing China’s economy grew 5.3% in the first three months of the year, above the 4.6% forecast in an AFP survey of investors. analysts.
Other data reinforced concerns about the outlook, with industrial production and retail sales coming in well below forecasts, heightening concerns about the outlook for the next quarter.
Shanghai stocks fell 1.7 percent and Hong Kong stocks fell 2.1 percent.
– Key figures around 2050 GMT –
New York – Dow Jones: UP 0.2% to 37,798.97 (closing)
New York – S&P 500: DOWN 0.2 percent to 5,051.41 (close)
New York – Nasdaq Composite: DOWN 0.1 percent to 15,865.25 (close)
London – FTSE 100: DOWN 1.8 percent to 7,820.36 (closing)
Paris – CAC 40: FALL of 1.4% to 7,932.61 (closing)
Frankfurt – DAX: DOWN 1.4% to 17,932.61 (closing)
EURO STOXX 50: DOWN 1.4 percent to 4,916.99 (closing)
Tokyo – Nikkei 225: DOWN 1.9 percent to 38,471.20 (closing)
Hong Kong – Hang Seng Index: DOWN 2.1% to 16,248.97 (closing)
Shanghai – Composite: DOWN 1.7 percent to 3,007.07 (closing)
Dollar/yen: RISING to 154.72 yen from 154.28 yen on Monday
Euro/dollar: DOWN to $1.0622 from $1.0624
Pound/dollar: DOWN to $1.2426 from $1.2446
Euro/pound: UP to 85.45 pence from 85.36 pence
North Sea Brent: down 0.1% to $90.02 per barrel
West Texas Intermediate: DOWN 0.1% to $85.36 per barrel
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