By Callum Keown
European stocks tumbled and oil prices soared on Friday after a top Iranian commander was killed in a U.S. airstrike at Baghdad’s airport.
The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.49% fell 0.4% after paring early heavy losses, and the DAX /zigman2/quotes/210597999/delayed DX:DAX -0.62% dropped 1.4%, reversing yesterday’s new year rally, while Brent crude futures soared 4% to $68.62 and West Texas Intermediate crude for February jumped 3.8%.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.44% , home to oil majors BP /zigman2/quotes/202286639/delayed UK:BP -2.71% and Shell /zigman2/quotes/206428183/delayed UK:RDSA -2.02% , suffered smaller losses in early trading and rebounded to trade 0.2% for the day.
What’s moving the markets?
General Qasem Soleimani, Iran’s most powerful military commander, was killed by a U.S. airstrike in Iraq on Thursday night, sending global markets into a spin. The Pentagon said Soleimani was “actively developing plans to attack American diplomats and service members in Iraq and throughout the region”.The attack reignited geopolitical tensions with Iran’s Supreme Leader Ayatollah Ali Khamenei promising “severe revenge.”
As investors sought safe havens amid mounting risk, the price of gold /zigman2/quotes/210034565/delayed GC00 -0.18% climbed 1.3% to $1548.
AJ Bell investment director Russ Mould said: “It is unsurprising to see crude oil prices trade higher to factor in potential disruption to supply from the region.
“Turbulence often sees investors reaching for the safety belt of gold exposure and this explains the advance for the precious metal this morning.”
He added: “What happens next for equities will depend on what form Iran’s promised ‘severe revenge’ takes and how nations which are more friendly to it, like China and Russia, respond.”
Which stocks are active?
Airline stocks were among the worst affected as oil prices rose sharply. Air France /zigman2/quotes/205396176/delayed FR:AF -3.30% plunged 7.7%, Deutsche Lufthansa /zigman2/quotes/205496028/delayed DE:LHA -1.79% dropped 6.6% and easyJet /zigman2/quotes/202825892/delayed UK:EZJ -0.56% fell 3.4%.