The markets reacted to the Iranian retaliatory strikes against Israel over the weekend with a sense of cautiousness, as gold and oil opened slightly higher while European and US index futures showed no major movements initially. Iran launched a massive drone and missile attack on Israel in response to an Israeli attack on the Iranian consulate in Damascus two weeks ago. Iranian officials stated that they consider their response to be concluded, but warned of further retaliation if Israel responds to their attack.
European markets traded higher today, with the German DAX and French CAC40 both adding 0.4%. However, the UK FTSE 100 dropped by 0.4%. US stock markets opened higher initially but began to slide in the afternoon amidst concerns over a potential all-out war between Israel and Iran in response to the attack.
Israeli military officials confirmed that there will be a response to Iran’s attack but did not provide specifics. As a result, Wall Street indices erased previous gains and are now trading lower on the day. Energy commodities also saw declines, with oil dropping by 0.6-0.7% and US natural gas prices plunging over 5%.
Safe-haven assets like gold and silver saw gains amid the heightened geopolitical tensions. Gold rose by 1% while silver jumped by 2.4%. Additionally, cryptocurrencies traded higher, with Bitcoin adding 0.2% and Ethereum trading 1.4% higher.
In other news, US retail sales saw an increase of 0.7% MoM in March, surpassing expectations. The Atlanta Fed GDPNow indicator also suggests a 2.8% annualized growth in Q1 2024, up from 2.4%. Overall, the markets are closely monitoring the developments in the Middle East as tensions between Israel and Iran continue to escalate.
