Key News Overnight:

Tensions in the Middle East was the major macroeconomic story yesterday. Nerves were rattled on Friday after the US announced that it had killed top Iranian General Qasem Soleimani, and sparked concerns of an outright conflict in the Middle East. Asian and European stock markets generally underperformed yesterday because of the news.

The ASX found itself bolstered by the climb in oil prices and gold prices yesterday, with mining and energy stocks keeping the ASX200 in positive territory. The major laggard for the market proved to be the banking sector, which fell as a result of the drop in local and global bond yields.

Oil and oil sensitive assets have been the beneficiaries of greater geopolitical risks in the Middle East. Oil prices have rallied nearly 7% since Friday, as traders price into the market the possibility of supply and production disruptions in the Middle East.

With a change in the tide of the recent bullish run, there was a shift into safe haven assets. Gold has proven to be the asset of preference for traders, and that saw the yellow metal briefly touch a 7-year high yesterday, closing at US$1,565.2.

Yesterday saw a general desire for safety in the market, however, the USD continued to underperform, down 2% since Dec.

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