Israel Strikes Iran Amid Rising Tensions

SINGAPORE (Reuters) – Israel reported early Friday that it struck Iran, leading to explosions reported in Tehran. This comes as tensions escalate over U.S. attempts to halt Iran’s production of material for atomic bombs.

U.S. Involvement

Two anonymous U.S. officials indicated that there was no U.S. assistance or involvement in the attack.

Market Reaction

• U.S. stock futures fell 1.5%
• Oil prices surged
• U.S. Treasuries rose
• The U.S. dollar, Japanese yen, and Swiss franc strengthened.

Analyst Quotes

MATT SIMPSON, Senior Market Analyst, City Index, Brisbane

“Israel’s ‘pre-emptive’ strike has increased volatility in Asian trading. Traders are anxious about a Middle East conflict, especially after Iran warned it would retaliate. Crude oil has surged past bearish trendlines, possibly reaching $78 or even $80 soon. The question is whether this reaction will be impactful or just a momentary trend.”

CHRISTOPHER WONG, Currency Strategist, OCBC, Singapore

“The USD and other safe-havens like CHF and gold rebounded due to escalating geostrategic tensions, while risk proxies lagged. The volatility may disrupt the ongoing USD downtrend.”

JESSICA AMIR, Market Strategist, Moomoo, Sydney

“Equities have stalled for some time, and this situation may trigger further declines after a record 30% rise globally. Defensive sectors in utilities, energy, and defense are expected to thrive, especially given the Middle East’s role as a key oil supplier.”

HIROFUMI SUZUKI, Chief FX Strategist, SMBC, Tokyo

“With increased geopolitical risks, the FX market reflects heightened caution. The risk-off sentiment likely favors the Japanese yen, impacting the USD/JPY exchange rate, which may find support around 140 yen.”

TONY SYCAMORE, Analyst, IG, Sydney

“I anticipated Israel to consider restraint ahead of U.S. discussions, but they acted independently. The lack of clarity on targets is causing anxiety in risk asset markets, likely leading to further declines in investor sentiment.”

KARL SCHAMOTTA, Chief Market Strategist, Corpay, Toronto

“Reports of a strike on Iran are causing traders to seek safety as details remain scarce. The market reactions have been limited so far.”

CHARU CHANANA, Chief Investment Strategist, Saxo, Singapore

“This geopolitical escalation complicates already fragile market sentiment. If tensions de-escalate, markets might recover; however, threats to oil supply routes could maintain a risk-off atmosphere and keep upward pressure on crude prices. “,

Conclusion

This situation marks a significant geopolitical escalation, with potential implications for markets and global supply chains, particularly regarding oil.