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Dow Futures Slip, But U.S. Stocks Set to Recover Following Iranian Missile Attacks on U.S. Airbases In Iraq

Wall Street looks set to avoid another round of selling Wednesday even as safe-haven assets crowd out stocks following last night's Iranian missile attack on two U.S. air bases in Iraq.

The Wednesday Market Minute

  • Global stocks resume side following Iranian missile strikes on two U.S. air base targets in Iraq in what it called "retaliation" for the killing of Major-General Qassem Soleimani.
  • President Donald Trump to make statement Wednesday, but Tweeted last night that "all is well" and seemed to suggest there were no American casualties in the attacks.
  • Gold tops $1,600 for the first time since March 2013, while Treasuries and oil extend rally, as investors plow cash into safe-haven assets.
  • Wall Street futures suggest modest opening declines ahead of earnings from Walgreens Boots and Constellation Brands.

U.S. equity futures remained under pressure Wednesday, while gold surged to seven-year highs and oil prices extended recent gains following a series of Iranian missile attacks on American targets in Iraq following last week's Trump-ordered killing of a key military commander. 

However, Iran's suggestion that is retaliation had "concluded", and the fact that no U.S. troops or citizens were reported injured, allowed investors to climb back into risk markets later in the morning session.

U.S. stocks had first looked set for notable opening bell declines, echoing the defensive tone in overnight trading, but contracts tied to the Dow Jones Industrial Average now suggest a 50 point decline, all of which come from Boeing's  (BA)  2% slide following the crash of a 737-800NG last night in Tehran will likely take 45 points from the 30 stock average.

The improving sentiment was also reflected in futures linked to the S&P 500, which suggest a 3.5 point gain for the broader benchmark.

Iran's Islamic Revolutionary Guard Corps said it fired 15 missiles at two U.S. air base installations in Iraq -- Ain Al-Asad and Erbil -- in retaliation for the January 3 drone strike that killed Major General Qassem Soleimani.

"Iran took and concluded proportionate measures in self-defense," Iranian Foreign Minister Jawad Zarif said in a statement via his official Twitter account. "We do not seek escalation or war, but will defend ourselves against any aggression." 

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President Donald Trump said he would make a statement on the attacks at 11:00 am Eastern time Wednesday, but seemed to suggest there were no American casualties, despite Iranian TV reports that 80 people were killed in the strikes. 

Safe-haven assets surged in overnight trading following the reports of the attacks, which came around 6:30 pm Eastern time, with gold rallying past the $1,600.00 mark for the first time since March of 2013 and U.S. Treasury bond yields, which move in the opposite direction of prices, falling below the 1.8% mark.

Global oil prices were predictably higher amid the rising military tensions in the Gulf region, which is home to around half of the world's crude production, although gains were capped by hopes that Iran would avoid targeting tankers and installations near the Strait of Hormuz, through which around a fifth of the world's crude supply is transported. 

Prices slumped, however, later in the session as equity market sentiment improved and the U.S. dollar -- which normally moves in the opposite direction of crude -- posted solid gains against its currency peers/

Brent crude futures contracts for February delivery, the global benchmark for pricing, were last see seen 34 cents lower from their Tuesday close in New York and trading at $67.93 per barrel, while WTI contracts for the same month, which are more tightly-linked to U.S gasoline prices, were marked 64 cents lower at $62.06 per barrel.

European stocks opened weaker across the board, with the Stoxx 600 benchmark falling 0.2% by mid-day trading in Frankfurt, lead to the downside by banking and industrial stocks. 

Britain's FTSE 100, meanwhile, was seen falling 0.2%, which declines supported by gains for oil majors BP and Royal Dutch Shell, which edged higher amid the extended gains in global crude prices. 

Overnight in Asia, safe-haven buying pushed the yen to around 108.42 against the U.S. dollar, clipping 1.57% from the export-heavy Nikkei 225, which closed at 23,204.76 points. The region-wide MSCI ex-Japan index, meanwhile, fell 0.62% heading into the final hours of trading amid notable declines for stocks in China and Hong Kong.