What global market voices are saying about impact on financial market

The escalating tensions between Iran and Israel is expected to spark volatility in global markets, with investors closely monitoring the situation amid growing concerns of a full-blown war. The uncertainty surrounding the geopolitical landscape will likely heighten risk aversion among traders.

There is a palpable fear that any escalation in tensions could trigger panic selling across various asset classes, as investors seek to mitigate their exposure to geopolitical risk, said analysts.

Stocks have already been under pressure due to fading expectations for significant Federal Reserve interest rate cuts this year following the US’ March inflation print. The negativity among investors may be fueled further by reports suggesting that the Iran-Israel conflict might push crude prices above $100 per barrel.

Also Read | Iran-Israel war may push crude to $100 per barrel; can trigger panic selling, volatility in equity markets

Here’s what global market voices are saying about the Israel-Iran war’s impact on the financial market

Market expert Ajay Bagga said that a lot of the market impact will depend on further escalation of the Iran-Israel conflict. “If Israel further escalates or Iran does another round of attacks, the markets will be in Risk-Off mode. Precious metals and safe haven currencies as well as crude oil will go up while risk assets will see a sell-off,” Bagga wrote in an X post.

A small correction in markets is expected, unless there is some other action this evening by Israel or Iran, said Bagga, adding that crude has already baked in most of the risks. “The only risk is the closure of the Straits of Hormuz by Iran, which will disrupt 17 mbpd outflows and take oil to 100$ plus levels,” he told Moneycontrol.

Oil jumped on Friday with global benchmark Brent rising as much as 2.7 percent to top $92 a barrel, a level last reached during the early days of the Israel-Hamas war.

“Direct Iranian engagement puts higher odds of a potential supply disruption in the region, causing many traders to continue to reach for exposure in crude and upside crude call options,” Rebecca Babin, senior energy trader at CIBC Private Wealth told Bloomberg.

Gurmeet Chadha, Managing Partner & CIO, Complete Circle Wealth wrote on X, “We are in a bull market for next 6-7 years at least. There will be multiple corrections of 10-15 percent on the way. There will also be a larger one ( 25 percent +) at some time .. but it’s integral to equity investing.”

“DO NOT lose sight of the BiG Picture- that’s India leading the global growth and becoming $10 trillion economy. Have a Goal for 2030.. stick to your plan put and keep adding on dips when u have liquidity!” Chadha wrote.

Also Read | Israel-Iran War: How rising crude prices can impact external account, rupee

Iran’s Revolutionary Guards seized a cargo ship in the Strait of Hormuz on April 13, saying the vessel was linked to Israel, which went on high alert over a possible direct Iranian attack that would ramp up a decades-old standoff between the regional rivals.

It would be a perfect storm if there is any major supply disruption through the Strait of Hormuz, according to Peter Mcguire, CEO, XM Australia. It’s important to monitor the Strategic Petroleum Reserve (SPR) closely. If President Biden decides to replenish the SPR on a global scale, it could involve adding over 200-300 million barrels, thereby potentially driving prices higher, he said

“The situation remains dynamic, contingent upon factors such as potential retaliation and the progression of events in the Middle East. The week ahead promises to be volatile, with Brent possibly surging to $95 and Gold reaching $2450 or higher in response,” Maguire told Moneycontrol.

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