War jitters fan global losses

International markets were rattled yesterday as blasts in Iran that killed at least 103 fanned fears of the war between Israel and Hamas spreading further.

Oil prices spiked more than three percent after twin bomb blasts ripped through a crowd commemorating Revolutionary Guards general Qasem Soleimani, in what Iranian authorities labeled a "terrorist attack."

Soleimani was killed four years ago in a US strike in Iraq. The closure of a Libyan oil field also lifted supply concerns.

"Heightened tensions in the Middle East following a bomb blast at a ceremony honoring a slain general in Iran have led to further risk-off sentiment and rising US yields," said Axel Rudolph, senior market analyst at online trading platform IG.

Equities were also under pressure as investors worried that the stocks rally in the final months of 2023, on hopes of interest rate cuts in 2024, may have gone too far.

The market got "got way ahead of itself" in December, said Hans Olsen, chief investment officer at Fiduciary Trust.

"There needs to be some sort of consolidation of this run, in order for it to last," he added, noting that to forge ahead without fundamental changes is "not healthy and not durable."

Meanwhile, minutes from the Federal Reserve's most recent policy meeting indicated that officials expect interest rates may need to remain high "for some time" to combat stubborn inflation.

Equities surged late last year on expectations that the US central bank would slash interest rates in 2024 as inflation cools.