• Oil surges and gold rallies after America kills Iran commander
• Risk-off mood spreads across assets, dashing new year optimism

These are the moves in major markets:

Stocks

• Futures on the S&P 500 Index dipped 1.2% as of 7:13 a.m. New York time.
• The Stoxx Europe 600 Index fell 0.9%.
• The MSCI Asia Pacific Index fell 0.1%.

Currencies

• The Bloomberg Dollar Spot Index climbed 0.3%.
• The euro decreased 0.4% to $1.1131.
• The British pound declined 0.7% to $1.3059.
• The Japanese yen increased 0.4% to 108.10 per dollar.

Bonds

• The yield on 10-year Treasuries fell seven basis points to 1.81%.
• Germany’s 10-year yield dipped seven basis points to -0.29%.
• Britain’s 10-year yield declined seven basis points to 0.728%.

Commodities

• West Texas Intermediate crude climbed 3.8% to $63.52 a barrel.
• Gold rose 1.2% to $1,547.77 an ounce.

Here are some events to watch for this week:

• Federal Open Market Committee minutes will be released on Friday.
• U.S. ISM manufacturing is also due. The Institute for Supply Management’s PMI is forecast to show a contraction for a fifth month.

The risk-on sentiment that ushered in the new year came to an abrupt end on Friday as tensions between the U.S. and Iran escalated, sinking American equity futures with stocks and buoying haven assets including gold, the yen and Treasuries. Oil surged.

Contracts for all three of the main U.S. gauges slumped after an American airstrike in Baghdad killed a top Iranian commander and the Middle Eastern country’s leader threatened “severe retaliation.” The VIX Index, a measure of expected equity price swings, jumped the most on a closing basis since August. The Stoxx Europe 600 Index also slid, though energy companies bucked the retreat after West Texas oil at one point rallied more than 4%.

Read more: Ten Strategists on What U.S.-Iran Escalation Means for Markets.

Most shares in Asia reversed or erased gains and the yen strengthened, though equities in Japan remain shut for a holiday. Gold hit the highest in four months and the yield on 10-year Treasuries looked poised for the biggest drop in three weeks as government bonds globally rallied. Data showing German unemployment increased by more than forecast compounded the cautious mood in Europe, and the euro extended losses as the DAX Index led equity declines.

The developments derailed a bullish mood that pushed the S&P 500 to a record high Thursday. Traders had returned from holidays to the news that China’s central bank had moved to support the economy and President Donald Trump expected to sign the first phase of a trade deal with the Asian nation on Jan. 15. Beijing has yet to confirm the date.

The flare-up could “dash market hopes for a rebound of the global economy that is still to emerge from under the cloud of the U.S.-China trade war,” said Valentin Marinov, the London-based head of G-10 currency research at Credit Agricole SA. “Risk sentiment should remain fragile also because central banks may be slow to respond or simply no longer have the arsenal to respond in an adequate way.”

A gauge of developing-nation stocks joined the sell-off, though most equity markets in the Middle East are closed for the weekend.