U.S. stocks drop following Soleimani assassination

Major stock markets are falling after U.S. forces killed a top Iranian general overnight.

Leading indexes were down 0.8% in early trading, while oil prices surged. The drops came after a bullish start to the New Year and blockbuster gains in 2019. The S&P 500 fell 0.6%, to 3,237, in early trading, while the Dow lost 0.7% and tech-heavy Nasdaq declined 0.7%.

News of the death of Gen. Qassem Soleimani prompted expectations of Iranian retaliation against U.S. and Israeli targets in the Middle East. Although investors don’t appear to be panicking, they’re turning cautious in wake of the attack, analysts said.

“A big fat dollop of geopolitical uncertainty has landed on investors desks,” said Jeffrey Halley of Oanda in a report.

“Significant event”

A key source of uncertainty — what Iran might do now. In the past, the U.S. has blamed Iran for attacks on tankers and a September assault on Saudi Arabia’s oil industry that temporarily cut its production by half. Wall Street analysts speculated that oil prices would be the most affected, but that a broader escalation would be a drag on stock markets overall.

“We … would urge investors to frame this event not as another one-off military action that will fade from the news cycle, but as a significant event in the US-Iranian relationship that will alter the Middle East substantially,” Height analyst Clayton Allen told investors.

Who was Qassem Soleimani?

“[E]xpect defensive stocks to outperform, with downward pressure on Treasury yields and gains for safe-haven currencies, until Iran’s response becomes clear,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note.

The price of gold, which investors buy in times of uncertainty as a safe haven of value, was up 1.4% at $1,548.80 per ounce.

Stock markets in Asia and Europe also declined.