Oil, Gold Prices Soar as Markets Plunge

From Associated Press

World oil prices jumped nearly $2 a barrel today, gold soared and a panicky Tokyo stock market plunged as the deadline passed for Iraq to leave Kuwait.

But trading was light in stock, bond, dollar and other markets because of uncertainty over whether or when war would break out between Iraq and a U.S.-dominated force in the Persian Gulf.

“People are just waiting to see what happens,” said Richard Davidson, a stock trader with Morgan Stanley Capital International in London. “There’s no point in dealing ahead of what could be a major conflict.”

Oil and gold futures were the only busy markets, as traders were anticipating the outbreak of a war that could jeopardize world supplies.


In foreign exchange trading, the dollar was up against all major currencies except the British pound.

In Tokyo, stocks plunged in large part because Japan is seen as especially vulnerable to a rise in oil prices. Stocks also were lower in European and other Asian markets.

The Nikkei Stock Average of 225 selected issues lost 770.53 points, or 3.32%, from Monday’s close to end the day at 22,442.70. Most of the decline occurred in Tokyo’s morning session.

A brief round of applause came from traders on the Tokyo Stock Exchange floor when the deadline passed at 2 p.m. local time without news of a war. But hardly any hand signals were visible indicating trades in the works as most people stood around watching the transaction board.


Another round of applause sounded through the hall as the first substantial stock transaction after the deadline was recorded nine minutes later.

“With increasing fears of possible armed conflict in the gulf, there were few buyers,” said Takashi Morinaga, a stock market analyst with Okasan Securities Co.

Stocks also fell in Hong Kong, Seoul, Bangkok, Kuala Lumpur and other markets in quiet trading.