Just when we thought the markets would start to write this episode off, the deluge of headlines was due to drop on a Friday. Israel is understood to have carried out several strikes earlier here, but Iran has downplayed this in response. This is shaping up to be a case of Iran saying there is nothing to fight back against if the attack wasn’t even important.
Risk trades were rocked by fear at first, but we are seeing some of these moves dissipate naturally amid Iran’s response. Gold rose as high as $2,417 earlier, but is now back to $2,388 on the day. Stocks remain a bit more nervous, however, with S&P 500 futures currently down 0.9%.
Without the fact that there was weekend risk to consider, I think we could have seen a stronger rebound in the markets. But also keep in mind that when headlines hit earlier, it was under lighter trading conditions. The initial reaction could therefore have been excessive.
Either way, it’s still likely that investors will choose to play it safe ahead of the weekend. And that could keep stocks particularly under downward pressure, capping a full week of losses on Wall Street.
As mentioned earlier, this is a very timely development to help stocks emerge from their turmoil following the relentless rise since November last year. Overall, this is an event that will take a back seat. And in the case of markets these days, it often doesn’t take that long. But at the same time, also consider the price action on the charts. Buy value, sell hysteria.
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