Global stocks wavered and oil prices rose on Tuesday, as conflict between Israel and Iran entered its fifth day, while the yen was choppy after the Bank of Japan decided to slow the pace of reduction in its bond purchases from April next year.
The Bank of Japan (BOJ), which left its short-term interest rates at 0.5 percent as expected, decided to leave unchanged its bond taper plan that runs through March 2026, but set out a new plan beyond next April.
The yen swung between small gains and losses to stand at 144.80 against the dollar as investors’ focus switches to a press conference by BOJ Governor Kazuo Ueda to explain the decision.
Heightened uncertainty and escalating air conflict in the Middle East drove investors to traditional safe-haven assets, as a rise in US Treasuries pushed yields lower across the curve, while gold steadied after a 0.5 percent rise earlier.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent, while China and Hong Kong equities slipped 0.1 percent each.
Markets feared that conflict between Tel Aviv and Tehran could spill over in the broader oil-rich Middle East. Oil markets’ reactions have been the most volatile, while stocks and currencies have been more guarded.
US President Donald Trump urged everyone to evacuate Tehran and cut short his visit to the Group of Seven summit in Canada, while a separate report said he had asked for the national security council to be prepared in the situation room.
The developments sparked a wave of risk-off moves in which S&P 500 futures fell 0.3 percent, European futures dropped 0.6 percent, while crude prices, briefly jumped more than 2 percent.
“Suspicion is that we’re about to see the United States begin some sort of military action in Iran and we’re now seeing some risk aversion because it brings another element of uncertainty,” said Tony Sycamore, a market analyst at IG.
