Futures steady as Iran retaliation seen as contained

[January 08, 2020]  By Medha Singh

(Reuters) - U.S. stock index futures turned higher on Wednesday after Iran signaled no further escalation in military strikes following its attack on U.S.-led forces in Iraq, allaying investor worries of a wider war in the Middle East.

S&P 500 e-minis <EScv1> tumbled as much as 1.7% overnight after Iran's attacks in response to the killing of its top commander Qassem Soleimani last week.

However, Iranian officials later said the strikes "concluded" its response to Soleimani's killing and U.S. President Donald Trump tweeted "All is well!".

Trump is expected to make a statement later in the day. One source said early indications were of no U.S. casualties.

"Markets have stabilized to some degree after the initial burst of volatility with investors taking some reassurance from the absence of U.S. casualties and the measured tone of the official responses," said Lukman Otunuga, senior research analyst at FXTM.

"There is a lot of uncertainty in the air with markets still in 'wait-and-see' mode until fresh clarity on the U.S.-Iran face-off."

The S&P 500 e-minis were up 6.75 points, or 0.21%, by 6:25 a.m. ET, while Nasdaq 100 e-minis <NQcv1> were up 13.75 points, or 0.16%. Dow e-minis <1YMcv1> were down 11 points, or 0.04%.

Boeing Co <BA.N> shares fell about 2% in premarket trade after its 737-800 jet belonging to a Ukrainian airline burst into flames shortly after take-off from Tehran, killing all 176 people aboard.
 

A maintenance worker sweeps the floor after the cling bell at the New York Stock Exchange (NYSE) in New York, U.S., December 31, 2019. REUTERS/Bryan R Smith

The rise in geopolitical tensions lifted shares of defense contractors Lockheed Martin <LMT.N>, Northrop Grumman Corp <NOC.N> and Raytheon Co <RTN.N> between 0.6% and 1.9%.

Corning Inc <GLW.N> fell 2.3% after Morgan Stanley downgraded shares of the display glass maker to "equal weight" from "overweight".

Lennar Corp <LEN.N> gained 3.1% after the No. 2 U.S. homebuilder reported a better-than-expected quarterly profit.

Markets also awaited the ADP National Employment report, often considered a precursor to the Labor Department's more comprehensive non-farm payrolls data. The ADP report is expected to show 160,000 jobs were added in December, compared with 67,000 in the previous month.

(Reporting by Sagarika Jaisinghani and Medha Singh in Bengaluru; Editing by Sriraj Kalluvila)

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