Stocks Fall as War Fears Fuel a Rush for Bonds – US Market Wrap

The financial world was roiled by a surge in geopolitical risks, which sent stocks plunging and prompted a flight to the market’s safest havens, such as bonds and the dollar. Oil prices surged.

Equities experienced their worst day since January following a news report that Israel was bracing for an attack by Iran on government targets. Approximately 40 launches were identified crossing from Lebanese territory, with some intercepted, according to an Israel Defence Forces post on X. US President Joe Biden said he expects Iran to attack Israel sooner rather than later, and his message to Iran is to “don’t” do so.

Wall Street’s “fear gauge,” the VIX, has risen to levels last seen in October.

The dollar had its best week since September 2022. Brent oil closed above $90. Gold briefly surpassed $2,400 per ounce before retreating.

Rising geopolitical tensions, most recently in the Middle East, but also including attacks on Russian energy infrastructure by Ukraine, have fueled bullish activity in the oil options market. In recent days, there has been a surge in the buying of call options, which profit when prices rise, with implied volatility increasing.