Markets could be underpricing risks of Israel-Iran conflict

Global investors can underestimate the impact of a conflict between Israel and Iran, warned market observers on Monday, while actions gathered despite the climbing of war in the Middle East.

The two regional powers Fire trading on Mondaymarking the fourth day of consecutive combat from Israel launched air strikes against Iran last week.

Despite continuous fighting – with Hundreds reported are dead – The world’s stock markets underwent a positive dynamic on Monday, which apparently increases wider concerns concerning the conflict.

Russ Mold, investment director at AJ Bell, warned on Monday that there was a risk that the markets existed “the risk of a major conflagration in the Middle East”, in particular with regard to the energy market.

European actions open wide higher Monday, with Asia-Pacific Stocks And US Stock Futures Also exchange in green. Even the indices of the Middle East saw gains on Monday, the Tel Aviv 35 index saw the last time exchange 1% after falling 1.5% last week.

“This is partly because there are so many mobile parts and geopolitical considerations, and in part because the potential results are so unthinkable,” said MMOD. “In the worst case, the price of oil and actions would be the least of our concerns.”

In a note on Monday morning, David Roche, Stratege of Quantum Strategy, warned that the conflict between Israel and Iran will last longer than the Israeli lightning blows to which the market is used “.

Torbjorn Soltvedtp, Middle East principal analyst at Verisk Maplecroft, said that an escalation had remained “huge”.

“What we have now is very different, and what we see is indeed a war and an open war,” he told “Squawk Box Europe” of CNBC.

“And of course, this is something that has enormous implications, not only for the region, but also for the energy markets and how they interpret what is going on. You know, minute per minute and day after day.”

Energy markets have most distant from the news, because the Israel-Iran conflict has attracted supply problems.

So Friday marked the biggest day winning For gross since the large -scale invasion of Ukraine by Russia in 2022, however, the world reference Brent Futures gross – seen for the last time at $ 73.75 per barrel – were still well below prices seen in the aftermath of the Moscow foray into Ukrainian territory.

“A lull is the most likely result before climbing later when Iran rejects us the openings of Trump,” said Roche. “The market is likely to confuse the lull for lasting peace. I would use lull to adhere to energy assets as a safe refuge.”

“The typical model is for the S&P 500 To remove approximately -6% in 3 weeks after the shock, but then rally in 3 others, “said Reid.”[Our strategists] Believe that this incident will probably be softer than that, unless we get a notable escalation, because they point out that positioning on actions is already underweight … and a sale of -6% would need it to fall to the bottom of its usual range. “”

Philippe Gijsels, Director of the BNP Paribas Fortis strategy, told CNBC on Monday that he thought that the market was correct by not cutting a huge climb, like the United States in the fray, or a blocking of the Hormuz Strait.

The Hormuz StraitNestled between Iran and Oman, is a vital oil transit route through which millions of oil barrels are transported every day.

“However, the reaction of the market was very modest, so there is room for disappointment if things were to degenerate,” said Gijsels on Monday.