MSCI's global equities index dropped Tuesday as geopolitical tensions led investors to flee riskier assets. Oil futures surged amid fears of supply disruptions after Iran's missile launch, which followed Israel’s actions against Hezbollah in Lebanon. Both U.S. crude and Brent oil closed higher, gaining over 2%.
Wall Street's Mixed Reaction
While U.S. stocks closed above session lows, Treasury yields also pared declines on hopes that the Middle East conflict would not escalate further. The Dow Jones Industrial Average fell 173.18 points (0.41%) to 33,520.97, the S&P 500 lost 53.73 points (0.93%) to 4,108.75, and the Nasdaq Composite dropped 278.81 points (1.53%) to 17,910.36. The CBOE Volatility Index hit 19.25, its highest level since September 9.
Geopolitical Tensions and Domestic Concerns
The missile attack heightened safe-haven demand for the U.S. dollar and gold, with the dollar index rising 0.45% to 101.20 and gold prices climbing more than 1%. Compounding investor anxiety were concerns about potential disruptions to U.S. ocean shipping from a dockworkers' strike on the East and Gulf Coasts and the aftermath of Hurricane Helene.
“Markets were priced for perfection," said Carol Schleif, Chief Investment Officer at BMO Family Office. “Then you throw in the third factor of Iran firing missiles.”
Safe-Haven Assets Gain Ground
Spot gold rose 0.91% to $1,658.39 an ounce, with U.S. gold futures increasing 0.95% to $1,661.10. The Japanese yen and Swiss franc also saw gains as investors sought safer assets amidst heightened tensions and market volatility.


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