Impact on Financial Markets
Decline on Wall Street
- Dow Jones: The Dow Jones, a key index of US stock markets, lost 1.4 percent in early trading on Friday, trading at around 42,375 points.
- S&P 500: The broad S&P 500 fell by 0.9 percent and closed at 5,993 points.
- Nasdaq: The tech-heavy Nasdaq dropped 1 percent to 19,483 points.
Winners in the Crisis
- Energy Stocks: Shares of oil companies like Exxon (+1.6%) and Diamondback Energy (+3.5%) saw significant increases as oil prices rose by up to 14 percent.
- Defense Stocks: Companies like Northrop Grumman (+2.3%) and Lockheed Martin (+3%) also benefited from the geopolitical tension.
- Gold and Silver: These precious metals were sought after as safe asset classes, as they often gain value in times of crisis.
US Treasury Bonds
Despite the general uncertainty, US Treasury bonds did not rise, which is unusual as they are typically considered a safe investment. Instead, yields rose slightly as investors sold the securities.
Geopolitical and Economic Impacts
Oil Prices and Inflation
- The rise in oil prices could fuel US inflation, especially if major oil transport routes are blocked.
- A barrel of oil could cost over 120 dollars in extreme cases, further intensifying the economic impacts.
Nuclear Negotiations
The recent military escalation has further complicated negotiations between the US and Iran regarding the Iranian nuclear program. A planned meeting mediated by Oman is now unlikely.
Political Reactions
- Israeli Prime Minister Netanyahu plans to make calls with the presidents of the US and Russia to discuss the situation.
- US President Donald Trump praised the Israeli attack as “excellent.”