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U.S. stocks also moved lower, with the Dow Jones Industrial Average shedding 0.3 percent, the S&P 500 dropping 0.5 percent, and the tech-heavy Nasdaq index off 0.9 percent. Meanwhile, the CBOE volatility index, known as Wall Street’s “fear gauge,” spiked 7.5 percent.
The Wall Street Journal reported Monday that Iran’s Revolutionary Guard Corps helped Hamas plan Saturday’s assault on Israel, a revelation that could presage broader sanctions against Iranian oil if confirmed. A broader conflict in the Middle East could also threaten efforts to normalize Israel’s relationship with Saudi Arabia.
LPL Financial chief global strategist Quincy Crosby said the crude market is “hypersensitive to any indication that the conflict between Israel and Hamas is poised to expand into the oil producing region in the Middle East.”
Other so-called “safe-haven” assets, such as gold, also saw drew increased investor interest early Monday. “Whether this is a massive market moment or not depends on how long it lasts and whether others are sucked into the conflict,” Brian Jacobsen, chief economist at Annex Wealth Management, told Reuters.
Stock prices of several U.S.-based defense firms also surged Monday. Lockheed Martin, the world’s biggest defense contractor, had gained 7.5 percent by midmorning. Raytheon Technologies gained 4.3 percent, Northrop Grumman gained 11.3 percent and General Dynamics climbed 8 percent. By contrast, Elbit Systems, a major Israeli defense contractor, saw its stock decline 2.7 percent.
“The U.S. will look to accelerate the shipment of equipment, along with munitions at a time when supply is constrained,” Jefferies investment bank analyst Sheila Kahyaoglu wrote in a note to investors.
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