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MARKETS WRAP

Asian stocks slip, gold gains with yen as Middle East conflict rages

Trump hints at potential US involvement in Israel-Iran conflict as markets react to rising tensions. Oil prices near 4.5-month high.
Asian stocks slip, gold gains with yen as Middle East conflict rages A passerby walks past an electric monitor displaying recent movements of various stock prices outside a bank in Tokyo, Japan, March 22, 2023. REUTERS/Issei Kato/File Photo

  • Trump says US "may" or "may not" join Israeli bombing of Iran
  • Oil hovers near 4.5-month peak on risks of supply shock
  • Dollar firm on haven demand despite mixed signals from Fed

By Kevin Buckland

 - Stock markets in Asia edged lower on Thursday while safe havens such as gold and the Japanese yen gained as investors remained on edge over the possible entry of the United States into the week-old Israel-Iran air war.

President Donald Trump kept the world guessing about whether the United States will join Israel's bombardment of Iranian nuclear sites, telling reporters outside the White House on Thursday, "I may do it. I may not do it."

The Wall Street Journal said Trump had told senior aides he approved attack plans on Iran but was holding off on giving the final order to see if Tehran would abandon its nuclear programme.

Japan's Nikkei sank 0.8%, with additional downward pressure stemming from a stronger yen, which reduces the value of overseas revenues for the country's heavyweight exporters.

Taiwan's stock benchmark slid 0.9%, and Hong Kong's Hang Seng declined 0.8%.

US S&P 500 futures pointed 0.4% lower, although most US markets - including Wall Street and the Treasury market - are closed on Thursday for a national holiday.

Gold advanced 0.3% to $3,378 per ounce.

"Market participants remain edgy and uncertain," said Kyle Rodda, senior financial markets analyst at Capital.com.

"Speculation remains rife – fed probably strategically by the Trump administration – that the US will intervene, something that would mark a material escalation and could invite direct retaliation against the US by Iran," he said. "Such a scenario would raise the risk of a greater regional conflict, with implications for global energy supply and probably economic growth."

Brent crude edged down to $76.32 per barrel, but remained not far from the 4.5-month peak of $78.50 reached on Friday.

The yen gained 0.2% to 144.92 per dollar, while the US currency itself was also in demand as a haven, gaining 0.1% to $1.1472 per euro and 0.2% to $1.3398 versus sterling.

The Swiss franc edged down 0.1% to 0.8193 per dollar.

The Bank of England and Swiss National Bank both announce policy decisions later in the day, with the BOE widely expected to keep interest rates steady while the SNB is seen as likely to cut rates by 25 basis points.

Overnight, the Federal Reserve delivered some mixed signals to markets. Policymakers held rates steady, as expected, and retained projections for two quarter-point rate cuts this year.

However, Fed Chair Jerome Powell struck a cautious note about further easing ahead, saying at his press conference later that he expects "meaningful" inflation ahead as a result of Trump's aggressive trade tariffs.

(Reporting by Kevin Buckland, editing by Shri Navaratnam)

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