Stocks decline; Gold, oil consolidate on gains

By Yakob Peterseil, Bloomberg Businessweek.

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Stocks extended their losses; Gold surged to the highest in more than six years, while oil consolidated on gains as investors continued to grapple with the fallout from a U.S airstrike that killed a powerful Iranian general.

The Stoxx Europe 600 Index fell for a second session as the security situation in the Middle East appeared to deteriorate over the weekend, with Iran saying it would no longer abide by any limits on its enrichment of uranium.

President Donald Trump said the U.S. had identified 52 Iranian sites it would hit if Tehran retaliates.

American equity futures also retreated while most stocks in Asia declined.

The yen matched a three-month high before paring gains, while Treasuries steadied following last week’s jump. Brent crude oil traded around $70 a barrel as crude extended Friday’s surge.

The sudden escalation of tensions in the Middle East is casting a cloud over largely positive forecasts for risk assets at the start of 2020, with a U.S.-China phase-one trade deal expected to be signed later this month. Moves by Beijing to bolster economic growth, and signs of stabilization in Chinese manufacturing, have also offered hope for a rebound in commerce.

“Everyone got comfortable in that fact that the truce in the trade war had come through and the outlook for 2020 looked a little bit better and then we had another geopolitical reminder come through.

“It’s going to be a big driver of markets in the short term,” said Suncorp Group Financial Market Strategist Peter Dragicevich.

In the latest developments, Trump doubled down on threats to Iran and vowed to slap sanctions on Iraq if U.S. troops were expelled from the country.

Amaka E. Nliam