Middle East tensions hit Asian and Asean markets; oil and gold prices spike

[SINGAPORE] A wave of geopolitical panic swept across Asian markets on Friday (Jun 13), after Israel launched strikes on Iran’s nuclear and military infrastructure, stoking fears of a wider regional conflict.

Singapore’s Straits Times Index (STI) fell about 0.5 per cent or 19.1 points by 1 pm, trading at 3,903.8. Hong Kong’s Hang Seng Index slid 1.1 per cent or 255.7 points to 23,779.6.

Asean markets took hits as investor confidence waned. Malaysia’s Kuala Lumpur Composite Index (KLCI) fell about 0.6 per cent, as Vietnam and Indonesia’s main stock indices slid 0.8 per cent and 0.6 per cent, respectively. The Stock Exchange of Thailand’s index was down about 0.3 per cent.

In Japan, the Nikkei 225 index declined 1.1 per cent, while the Kospi in South Korea dropped about 1.2 per cent.

Israel said its strikes targeted “the heart of Iran’s nuclear enrichment programme”, including nuclear facilities and ballistic missile factories, and killed Iranian military commanders on Friday. The country added that the attacks would begin a prolonged operation to prevent Teheran from building an atomic weapon.

Oil prices spiked amid fears of escalation, with Brent crude futures climbing 13 per cent to a peak of US$78.50. Friday’s gain was the largest intra-day move for the Brent contract since 2022 after Russia invaded Ukraine and caused energy prices to soar. The contract was trading up 5.3 per cent at US$73.10 a barrel at about 8 am GMT.

European stocks opened lower on Friday, with London’s FTSE 100 index slipping about 0.6 per cent in the morning hours there, while Germany’s DAX index fell 1.1 per cent. The pan-European Stoxx 600 index lost 0.8 per cent.

Iran’s Supreme Leader Ayatollah Ali Khamenei said Israel will receive “harsh punishment” following Friday’s attack that reportedly killed several military commanders.

As fear of further conflict escalated, investors rushed to safer assets such as gold. The price of the precious metal jumped 1.3 per cent, reaching US$3,422 per ounce.

The US dollar index witnessed a brief rebound of 0.5 per cent to above 98, appearing to regain its safe-haven appeal “given the development is not a self-inflicted US wound”, Maybank analysts wrote in a note following the news.

The greenback jumped against Asean pairs following months of weakness, rising 0.4 per cent against the Singapore dollar, 0.9 per cent against the peso and 0.7 per cent against the ringgit.