It has been quite some time since geopolitics in the Middle East, in this case all-out war, captured market attention. But that is the case today, as the world focuses on Saturday’s Hamas attack on Israel. So today the market is taking a more risk-off approach, with the dollar being bid up while stocks are falling and oil prices are a big beneficiary.
S&P500 futures
U.S. futures opened narrower, with S&P 500 futures down about 0.8%, but things haven’t gotten any worse, at least in Asia.
The dollar is bidding almost parallel to the yen, with the euro/USD currently down 0.3% at 1.0550 and the Australian dollar/USD 0.5% down at 0.6350. USD/CAD was able to hold and hold steady at $1.3660 as WTI crude oil rose nearly 4% on the day to $86.05.
But this latest drama comes at a bit of a bad time for market players. Not only is Japan a public holiday today, but the US bond market is also closed for a partial holiday. And given how much of a focal point U.S. Treasuries have become for the overall market these days, it can be difficult to determine intraday price movements and how long they last.
But, as always, I would like to preach the following idea. Buy value, sell hysteria. The United States wants to be involved in all of this, and even though this is a significant recent escalation of tensions, this event will pass. The world’s attention spans are very short these days, and markets tend to follow a similar view.
There is no doubt that the future of the Middle East is currently very uncertain, and so was the case between Russia and Ukraine. And we can see how the latter is not important to the market at the moment.
