What subsequent for markets if Iran assaults Israel?

AI picture

Markets are at the moment in an enormous of a flight to security on fears that Iran may very well be making ready retaliation for the embassy bombing in Syria three days in the past.

Iran Supreme Chief Ayatollah Ali Khamenei mentioned Israel could be punished
for the assault, whereas President Ebrahim Raisi mentioned it would “not go
unanswered” after the attacks but those kinds of comments aren’t unusual.

Israel has said it wasn’t an embassy but a military building of Quds forces.

In any case, there are some vague poorly sourced reports talking about a response from Iran in the next 48 hours, including massive drone strikes within Israel. Obviously, that would be an overt act of war.

Oil prices have spike in response with brent above $90 and that would be perhaps the most-direct consequence of a war as Iran’s oil production and exports could be easily destroyed by Israel and would be a likely target.

For the rest of the market, it’s a classic case of risk aversion. US equities have reversed in a hurry.

S&P 500 intraday

Bonds are also bid but not strongly with 10-year yields down to 4.33% from 4.35%. The dollar is picking up as well but the moves have been less than 20 pips.

My rule of thumb is to at all times fade worry, significantly struggle fears. On this case, that might imply fading oil but it surely’s a bull market in crude proper now in order that’s powerful. I could also be extra inclined to purchase the dip in shares, particularly the Nasdaq. No struggle within the Center East goes to dampen demand for tech shares, although a super-spike in oil would definitely complicate the Fed’s job.