Oil prices jump, stocks slump after blasts in Iran

Global markets have been rattled as blasts in Iran that killed at least 103 fanned fears of Israel's war on Gaza spreading further.

Oil prices on Wednesday spiked more than three percent after twin bomb blasts ripped through a crowd commemorating Revolutionary Guards general Qasem Soleimani, in what Iranian authorities labelled 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 honouring 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, in hopes of interest rate cuts in 2024, may have gone too far.

The market "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.

'Focus on rate cut in US'

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

However, analysts have warned that investors should prepare for a pullback, with tech titans such as Apple and Amazon likely to take a hit.

The tech-focused Nasdaq Composite Index continued a year-opening slide on Wednesday, seeing a 1.2 percent drop after falling 1.6 percent a day earlier.

Apple shares fell 0.8 percent while Nvidia and Facebook parent Meta Platforms slumped as well.

The Fed's post-meeting statement in December had indicated three interest rate cuts this year, though some market participants are tipping far more.

Briefing.com analyst Patrick O'Hare said the market welcomed Fed Chairman Jerome Powell's indication that there was some talk at the meeting about when it might be appropriate to begin reducing interest rates.

"The upcoming fourth-quarter earnings season may be the perfect excuse to take profits and it's possible that we get something deeper now, as there have been no serious corrections in the whole of this bull run," he added.