The markets reacted quickly as a result of Israel's attack on Iran. What awaits us the next few days

The financial markets reacted quickly, following the attack of Israel on the goals in Iran, the most pronounced movements being around the oil price, which has lost much in advance, warns the analysts.

The financial markets reacted quickly, following the attack of Israel on Iran. Photo archive

The Supreme leader of the Tehran quickly promised severe retaliation measures. In response, Israel declared an emergency, closing educational institutions and airports and issuing public warnings on possible rocket and drones from Iran. In turn, Tehran officials recognize defensive measures, they announced cryptically that “The world will find out why Iran enriched uranium”, A statement interpreted on a large scale as a veiled reference to nuclear ambitions.

Washington has quickly distanced from the operation, urging tensions and emphasizing the imperative of protecting its regional interests. The Israeli offensive has undoubtedly exacerbated regional instability and destroyed the fragile perspectives of resuming nuclear negotiations with Iran, discussions that were scheduled for the next Sunday. Iran had previously warned that any attack on its nuclear infrastructure would cause retaliation against American positions in the region.

“The geopolitical conflict between Iran and Israel has deep historical roots, having origins in ideological, strategic and profound security divisions. The Iranian Islamic regime is fundamentally opposed to the existence of Israel, denouncing it as a” zionist occupant “, while Israel considers Iran an existential threat.

At the origin of the tensions is the nuclear program of Iran, about which Israel is afraid to lead to the manufacture of atomic weapons. Thus, this is a profoundly rooted conflict on religious and regional power, with significant global implications”, Points out the XTB analyst Radu Puiu.

The price of oil, the first to bear the effects of tensions

The extent of the attack and the potentially devastating consequences for the region will probably support the price of oil at high levels. Usually, geopolitical risks do not have a long -term impact on oil price, but this is a complex and constantly evolving situation.

Iran provides 5% of global oil supply, so that there is a risk that oil supply will be interrupted. This is the reason why the price of oil increased, although it has been withdrawn from the increase of 13% registered during the night. This conflict also has a nuclear component, as Iran withdrew from nuclear negotiations with the US, which were scheduled for Sunday.

The International Agency for Atomic Energy (IAEA) reported on Friday that there was no new radiation increase from Iranian nuclear installations, which suggests that a nuclear attack is not imminent. This calms the markets on Friday, and the price of oil is retiring. However, the situation could climb very quickly, explains XTB Romania analyst.

During Thursday, the UN Nuclear Supervisory Agency said Iran violated the non -roliferous nuclear weapons agreements. Iran tends to react negatively to resolutions against it and said it will respond with nuclear escalation. So far, this has not happened, but the situation is constantly evolving, and the risk of important news is high for investors.

World scholarships, sensitive to Israel's attacks

Global financial markets have reacted strongly to escalating geopolitical risk. The most pronounced movements were observed on the oil market, where the Futures reference contracts for the WTI oil initially increased by about 10%. At the time of reporting, oil prices lost from the advance, trading 2.5% above, in the area of ​​$ 70.50 per barrel, stresses Radu Puiu.

At the same time, gold, a traditional asset considered “refuge”, registered an increase of over 1%, after previously tested the threshold of $ 3,440. The sudden increase in the prices of these goods emphasizes the fears of investors and the perception of intensifying the risks related to supply in the Middle East.

These events will probably affect the appetite for risk today. European futures contracts are decreasing this morning. The Futures S&P 500 contracts indicate an important loss, the index being expected to open below the 6,000 -point threshold.

The foreign exchange market also reacts to events in the Middle East. The dollar has proven credibility as a refuge currency and is the strongest currency in the G10 Friday area, followed by Yen and the Swiss franc.

Specifically, it is not a good day for appetite for risk, and the pound is decreasing from the refuge coins. Government obligations are increasing throughout the curve, and the yields are smaller, which again highlights the government secur market as a rescue collage for the financial world when Radu Puiu shows.

What are the expectations of the following days

The situation between Iran and Israel will probably dominate the evolution of prices. Any escalation could be welcomed by a wave of sales and a transfer of capital to refuge coins and raw materials. However, if the situation is calmed, we could assist in a decrease in oil prices, even if it could remain high for a period of time.

In addition, the pressure on the US dollar could be temporary, which is foreseen to remain weak in the medium and long term – today's rally seems to be a short -term fluctuation.

Although a massive correction is expected in a short time, the shares of the defensive sector – users, defense contractors and some companies in the field – could be protected. If this conflict intensifies, and Iran threatens with nuclear attacks, another reason is constituted to accelerate European reunion.

Overall, US tariffs and budget problems will play a secondary role in relation to current geopolitical risks. Investors must also take into account the impact of increasing oil price on the future interest rates.

If the price of oil continues to rise to $ 100 in the coming days, we could attend an increase in the probabilities to reduce interest on the Futures market, anticipating interest reductions in the US and Europe, which could accentuate the downward pressure on actions. However, if a nuclear escalation is not reached, the price of oil could be set around $ 70 per barrel, Radu Puiu, XTB Romania, shows.