Crude oil prices and defense stocks climbed Monday after the worst attack on Israel in decades shook financial markets.
Energy prices moved higher on Monday on concerns that the war between Israel and Hamas will escalate into a wider conflict in the Middle East, limiting crude supplies. Brent crude futures, the global oil benchmark, rose 4.2 per cent. West Texas Intermediate crude futures rose 4.3 percent to $86.38 a barrel.
Shares of defense contractors also rose sharply. Lockheed Martin (LMT) jumped 8.9% and Northrop Grumman (NOC) jumped 11%, both Posting their best performances since March 2020. European defense companies, including Britain's BAE Systems and France's Dassault Aviation, were among the top gainers in the sector.
Investors piled into safe-haven assets, with gold futures, often sought after by investors in times of geopolitical conflict, rising 1.1 per cent.
Major U.S. stock indexes initially fell, but rebounded in late trading after the Israeli military recaptured several towns from Hamas. The S&P 500 rose 0.6%, while the tech-heavy Nasdaq Composite Index gained 0.4%. The Dow rose 197 points, or 0.6%.
Energy stocks benefited from the rise in oil prices, with the S&P 500's energy sector up 3.5 percent, its biggest one-day gain since April. Shares of Chevron (CVX) and Exxon Mobil (XOM) both rose more than 2.5%. Marathon Oil (MRO) and Occidental Petroleum (OXY) both gained more than 4.5%.
At the same time, airline shares fell as flights to Israel were canceled. American Airlines Group (AAL), Delta Airlines (DAL) and United Continental Holdings (UAL) all fell more than 4%. The U.S. Global Jets ETF (JETS) fell 2.6%.
European gas benchmarks have surged, reflecting supply concerns as offshore gas fields being developed by Israel are destined for European exports. The safest European government bonds rose, while yields on benchmark 10-year German and British government bonds fell.
The Treasury market was closed on Monday for the Columbus Day holiday, though the iShares 20+ Year Treasury bond ETF rose 2.4 percent, reflecting the conflict that spurred demand for longer-term debt.