ORLANDO, Florida, March 2 (Reuters) - Oil and gas prices clocked their biggest rise in years, while bonds and most stock markets fell on Monday, after the U.S.-Israeli attack on Iran over the weekend triggered waves of volatility across world markets. The big - and surprising - exception was Wall Street.
In my column today I look at the dilemma facing Treasuries investors - do they buy bonds on rising geopolitical instability and the hit to growth from surging oil prices, or sell on inflation fears?
So far, inflation worries appear to be the driving force.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. Iran vows to attack any ship trying to pass throughStrait of Hormuz 2. Iran conflict widens to Lebanon, Kuwait mistakenlyshoots down U.S. jets 3. Investors wrestle with Middle East curve ball scenarios 4. Swiss National Bank raises willingness to counterfranc's "excessive" appreciation 5. U.S. manufacturing activity steady, factory gateinflation surgesToday's Key Market Moves
* STOCKS: Almost every major Asian and European indexfalls, by around 1-3%. The main exceptions are China and U.S.indices - the Nasdaq and Russell 2000 rally. * SECTORS/SHARES: Four of S&P 500's 11 sectors rise: tech,industrials +1%; energy +2%. Consumer staples, discretionariesand healthcare -1% or more. Northrop Grumman, Marathon Petroleum+6%, AES -17%, Norwegian Cruise Line -10%. * FX: Dollar has best day since July. JPY slumps 1%, CHFfalls even more on SNB intervention threat. Recent CNY rallyshudders to halt. Bitcoin +5%. * BONDS: U.S. yields leap as much as 11 bps at the shortend, bear-flattening the curve. * COMMODITIES/METALS: Oil eventually settles +6%, EuropeanLNG+40% after Qatar halts production. Average U.S. gasolineprices top $3/gallon. Gold +1%, silver -4%.Today's Talking Points
* High energy. Very high
Supply disruption fears send oil and other energy prices soaring. Oil eases off earlier highs but still ends the trading day up 6%, pushing the year-on-year price change firmly into positive territory. This is a significant change for inflation models.
The biggest rise was in liquefied natural gas, after Qatar said it has halted production. Benchmark European LNG rocketed more than 50% before trimming those gains to 40%, still the biggest one-day rise since Russia invaded Ukraine four years ago.
* Let's be franc
Given the slump in world stocks, spike in market volatility and surge in geopolitical risk, one might have expected the Swiss franc to appreciate on Monday. After all, it is the world's safest "safe haven" currency, right?
But the franc tumbled more than 1% against the dollar, its biggest fall since May, fueling speculation the SNB intervened to counter the flood of safe-haven buying. For its part, the SNB said in a statement it was prepared to do just that in order to prevent "excessive" appreciation of the franc. The signs are, it did.
* Resilience or complacency?
After Asian and European stocks fell 1-3% on Monday, Wall Street opened lower too. But it soon recovered, and ended the day narrowly mixed - the Dow dipped 0.15%, the S&P 500 added 0.04%, while the Nasdaq climbed 0.4% and the Russell 2000 small caps index jumped 0.9%.
Given the severity of events in the Middle East, and their impact on energy prices and bond yields, that's remarkable. It could even be argued that the 1-3% declines in Asia and Europe were muted moves. But closing higher? Let's see how the rest of the week pans out.
What could move markets tomorrow?
* Developments in the Middle East, especially regardingenergy supply disruptions * Australia current account (Q4) * Japan unemployment (January) * Euro zone inflation (February, flash estimate) * UK Chancellor Rachel Reeves to announce new economicforecasts in budget update * Brazil GDP (Q4) * U.S. Federal Reserve officials scheduled to speak includeNew York Fed President John Williams, Kansas City Fed PresidentJeffrey Schmid, Minneapolis Fed President Neel KashkariWant to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Reporting by Jamie McGeever; Editing by Nia Williams)
