Israel-Iran tensions unlikely to have any major impact on global markets, say experts

Iran fired 100s of drones and missiles in an overnight attack towards Israel on Saturday evening.

The geopolitics playing out in the Middle East will hardly impact the global markets, market experts told CNBC-TV18 said on April 15.

Taimur Baig, managing director and chief economist at DBS Group Research, said markets can’t be brought down by one factor (rising tensions in the Middle East). He further said there is enthusiasm in the market and it won’t be easy to bring it down. “We are in a similar situation to 2018-19 when it was thought that high rates and low yield will crash the market. But ultimately it was the Covid pandemic that was responsible for the downfall,” Baig said.

“This time too it is being said that inflation is hot and there is not much to hold the markets. But it looks like there is plenty of enthusiasm, optimism and substantial green effect of equities injection,” he added.

It would take more than a little skirmish in the Middle East to have an impact, Baig predicted.

Mark Matthews, managing director at Julius Baer & Co, concurred and said, “This event in the Middle East is not big enough to bring down the markets.” He further said that if you look at the past events when the market came down, they mostly fell because the global economy was affected.

“So, the big question is if the economy will be impacted. We will have to see how the oil market reacts to that,” Matthews said. We will have to wait to see how the market behaves when Israel attacks Iran, he added.

Iran fired hundreds of drones and missiles in an overnight attack on Israel on Saturday evening. The unprecedented attack was in response to a recent strike on the Iranian consulate in Damascus, Syria, which Tehran suspects was done by Israel. According to reports, all the missiles and drones were intercepted and only minor damages were recorded.

This has worried the global markets as the strike could worsen the situation in the Middle East that is already struggling with the conflict between Hamas and Israel. A full-blown war between Iran and Israel could further escalate the situation.

This has also come at a time when the US CPI inflation jumped 0.4 percent quarter-on-quarter, which was more than expected. Investors are now scaling back their bets on the US Fed to cut interest rates.

However, what could calm the nerves of the investors is the fact that Iran, after the attack, said the “matter can be deemed closed” and President Joe Biden telling Israel Prime Minister Benjamin Netanyahu that US won’t support any counter attack.