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 $100 per barrel; can trigger panic selling, volatility in equity markets
Following the Iran action over the weekend, Gulf and Israeli stock markets showed marginal declines to flat trading. This sparked optimism that after the initial dip in Asian markets on the morning of April 15, there may be some buying activity in stocks.
If the situation remains stable and doesn't escalate further, attention will likely shift back to corporate earnings and the Federal Reserve outlook, market expert Ajay Bagga told Moneycontrol.
According to Bagga, crude has already baked in most of the risks. "The only risk is the closure of the Straits of Hormuz by Iran, which will disrupt 17 mbpd outflows and take oil to 100$ 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.
Gurmeet Chadha, Managing Partner & CIO, Complete Circle Wealth wrote on X, "We are in a bull market for the 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.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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