(Reuters) – U.S. stock indexes were set to slide on Friday as investors moved away from riskier assets after a U.S. air strike in Iraq killed a top Iranian commander, sharply escalating geopolitical tensions in the Middle East.
Iran’s Supreme Leader Ayatollah Ali Khamenei vowed harsh revenge after Qassem Soleimani, head of Iran’s elite Quds Force, was killed in the air strike in Baghdad that was authorized by President Donald Trump.
The flaring tensions sent prices of perceived safe-haven assets soaring, while threatening to derail a recent rally in stocks.
“The market is just on edge and is giving up a large portion of yesterday’s gains,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.
“There is a question of what this (air strike) is going to turn into and if it’s going to be something long lasting.”
The CBOE Volatility index .VIX, an options-based gauge of investor anxiety, hit its highest level since Dec. 10.
At 8:47 a.m. ET, Dow e-minis 1YMcv1 were down 232 points, or 0.8%. S&P 500 e-minis EScv1 were down 29.5 points, or 0.91% and Nasdaq 100 e-minis NQcv1 were down 94 points, or 1.06%.
Gold prices rose 1%, driving gains in miners such as Newmont Goldcorp (NEM.N).
Makers of weapons also benefited, with Lockheed Martin (LMT.N) up 1.7%.
Benchmark 10-year note yields US10YT=RR touched their lowest level since Dec. 12.
Drugmaker Incyte Corp (INCY.O) slumped 10.8% after a late-stage clinical trial of its experimental drug for treating an acute form of transplant rejection failed.
Reporting by Manas Mishra and Medha Singh in Bengaluru; Editing by Anil D’Silva