Timothy A. Clary | AFP | Getty images
The US participating in the war between Israel and Iran may seem like a geopolitics flash point that would make markets tumbled. Instead, investors largely picks up the escalation, with many strategists believing that the conflict is absorbed – and even bullish for some risk paths.
The MSCI World Index, which follows more than a thousand large and mid-cap companies from 23 developed markets, only dropped from 1 p.m. Safe ports are also traded mixed, with the Japanese yen 0.64% weakening at the dollar, while the spot gold prices fell 0.23% to $ 3,360 per ounce. The dollar index, which measures the US dollar against a basket with currency, rose by 0.35%.
In general, the market reactions were less aggressive after the American strikes were less aggressive, especially compared to just over a week ago when Israel launched air strikes against Iran.
“The markets regard the attack on Iran as a relief with the nuclear threat that has now disappeared for the region,” said Ives, director of Wedbush, adding that he sees minimal risks of the conflict in Iran-Israel that spreads to the rest of the region and therefore more “isolated.”
Although the severity of the latest developments should not be rejected, they are not seen as a systemic risk for the global markets, other industry experts repeated.
On Saturday, US President Donald Trump said that the United States had attacked the Iranian nuclear sites. Traders now keep a close eye on any possible countermeasures from Iran after the American strikes on his nuclear facilities.
Iran's potential closure of the street
Iran's Foreign Minister warned that his country reserved “all options” to defend his sovereignty. According to the Iranian state media, the parliament of the country has also approved the closing of the Strait of Hormuz, a crucial waterway for the global oil trade, with around 20 million barrels of oil and oil products that cross through it every day.
“It all depends on how Iran responds,” says Peter Boockvar, Chief Investment Officer at Bleakley Financial Group. “If they accept the end of their military nuclear desires … then this can be the end of the conflict and the markets will be good,” he said CNBC. Boockvar does not believe that Iran will perform the disruption of global oil stocks.
The worst-case scenario for markets would act if Iran would close the street, which is unlikely, said Marko Papic, head strategist at Geomacro Strategy.
“If they do, the oil prices north of $ 100, fear and panic take over, shares fall ~ 10% minimum and investors hurry to safe ports,” he said.
However, markets are now modest, given the “limited tools” that Tehran has at his disposal to take revenge, Papic added.
The idea of closing the Hormuz -Waterweg is a recurring rhetoric from Iran, but it has never been acted on it, with experts who emphasize that it is unlikely.
In 2018 Iran warned that it could block the Strait of Hormuz after the US had withdrawn the Nuclear deal and recovered sanctions. Similar threats were made earlier in 2011 and 2012, when Senior Iranian officials and the then vice-president Mohammad-Reza Rahimi consecration that the Waterweg could be closed if the Western countries imposed more sanctions against Iran's oil export because of the nuclear activities.
“Tehran understands that if they closed the street, the retribution of the US would be quick, punitive and cheeky,” Papic added.
In the same spirit, Yardeni Research founder Ed Yardeni said that the latest events have not shaken his conviction in the American bull market.
“We think that Trump has just restored the military deterrence of America, which increases the credibility of his 'peace by strength' mantra,” he said, adding that he focuses on 6,500 for the S&P 500 towards the end of 2025.
Although predicting geopolitical developments in the middle is a “treacherous exercise”, Yardeni believes that the region has now destroyed a “radical transformation” the Iranian nuclear facilities.
