— This is the script of CNBC's news report for China's CCTV on April 12, Thursday.
The US stock market shows the impact from the increased geopolitics tension in Middle East area. For 3 stock indexes, Dow Jones Average opened lower by less than 200 points, got some rebounding during the mid-day trading, but slumped again at the end of close, falling 218 points at close. Nasdaq Composite Index and S&P Index fell by 0.36% and 0.55% respectively.
US bank stocks led the losses in the S&P 500 index.
Goldman Sachs dropped 1.41%, Morgan Stanley declined 2.59%, Citigroup fell 0.88%, and Wells Fargo went down 1.31%.
The drop of bank stocks reflect risk aversion in market, as the market did not prepare for Trump's tweet on Syria with such an aggressive tongue. On this Friday, the US bank will release the earnings, thus, some traders take hedging strategies that is verified in some safe haven assets, such as gold. Gold price rose above $1360/ounce, climbing for the 4th consecutive trading day, boosting gold-mining companies' shares listed in the U.S.
For instance, Gold Fields, the 2nd largest miner in South Africa, its ADR listed at NYSE rose 3.23% in NY Exchange.
Meanwhile, the largest gold mining company, Barrick Gold, increased 2.43%.
The escalation of geopolitics in the Middle East area influences oil prices directly. During the overnight trading, oil prices hit their highest level in 3 years, with Brent Crude once reaching 73USD per barrel, the futures of West Texas light crude WTI rose more than 2.6%. This week alone, Brent Crude has increased more than 6%. In addition, Yen, seen as a safe haven currency, went stronger, while US Dollars dropped. As we all know, gold is an asset that's priced in the USD, so the surge in gold price will weaken the US dollars. At the same time, money chasing for safety flooded into the U.S. Treasury bonds, driving the bond prices higher and lower the bond yields. For example, the 10-year U.S. treasury yield fell around 3 basis points, it's obvious that these safe heaven assets follow the logic of trades on "middle east risks ". Some analysts stated that if the tension gets alleviated, we might see oil prices coming back down because the current inventory data could not support oil prices at current levels. Therefore, there might be a correction in oil prices. The market is also paying close attention to the development of this situation.