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Investing.com – Fears over the prospect of a conflict in the Middle East are roiling markets, with Brent crude jumping to $70 and safe haven gold hitting its highest level in seven years. Global stocks are in the red and in the Euro Zone data has showed that business activity remained close to stagnation at the end of last year. Here’s what you need to know in financial markets on Monday, Jan. 6.

  1. Trump, Iran trade threats

Fears over the fallout from the U.S. killing of a leading Iranian military commander intensified on Monday after Iran said it would no longer abide by the 2015 nuclear deal, meaning it will no longer limit the amount of enriched uranium it holds.

Iran had already vowed to retaliate for the death of Qassem Soleimani who was killed in a U.S. air strike last week. U.S. President Donald Trump has warned of a “major retaliation” if Tehran hits back, deepening a crisis that has heightened fears of a major conflict in the Middle East.

  1. Oil prices continue climb

Oil prices rose again Monday, building on Friday’s more than 3% surge amid fears of a disruption to energy supplies.

climbed above $70 a barrel to its highest level since last September — when Saudi Arabia’s Abqaiq oil processing facility was attacked. The global benchmark was last at $69.56 at 5:35 AM ET (10:35 GMT), up 96 cents, or 1.4%, from Friday’s settlement.

was at $63.77 a barrel, up 72 cents, or 1.1%, after touching $64.72 earlier, the highest since April.

  1. Safe havens in demand

prices rose to seven year highs, jumping to $1,582 per ounce, the most since since April 2013, while the yen and other safe-haven currencies were also in demand.

The hit a three-month high of 107.77 versus the U.S. dollar overnight and was last at 108.00. The was close to the four-month high of 1.0824 it reached against the euro on Friday.

The greenback was lower against a currency basket, with the sliding 0.2% to 96.28.

Sovereign bonds benefited from the safety bid with yields on Treasuries down at 1.78% having fallen 10 basis points on Friday.

“Iran is almost certainly to respond in some scale, scope and magnitude,” said Lee Hardman, currency analyst at MUFG.

Therefore “market participants are likely to remain nervous until there is more clarity over how geopolitical tensions between the U.S. and Iran will proceed,” Hardman said, noting that geopolitical tensions could hurt global economic growth, especially if the price of oil increases.

  1. U.S. stocks set to open sharply lower

U.S. stock markets are set to open sharply lower on Monday, extending losses from Friday. By 5:35 AM ET (10:35 GMT), were down 171 points or 0.6%. were down 0.6% while were off 0.7%.

Geopolitical tensions along with data showing a larger than expected contraction in the U.S. manufacturing sector in December saw Wall Street’s major indexes pull back from record highs on Friday.

European markets were broadly lower, while Japan’s fell 2% overnight.

The calendar for U.S. economic data and earnings is very light, with just the Purchasing Managers’ Index (PMI) due at 9:45 AM ET.

  1. Euro Zone business activity near stagnation

Euro zone business activity remained close to stagnation in December, a survey showed on Monday, as an upturn in services activity only partially offset a continued decline in the bloc’s manufacturing sector.

IHS Markit’s final euro zone composite PMI edged up to in December from November’s 50.6.

In the U.K., a similar survey showed that the services PMI picked up slightly to hit at the end of the year, indicating that activity flatlined, but businesses reported that optimism rose to its highest level in 15 months.

The report boosted the against the (admittedly) softer U.S. dollar.

–Reuters contributed to this report