(Reuters) – President Donald Trump on Saturday said a “very successful attack” was carried out on three nuclear sites in Iran.
“Iran’s major nuclear enrichment facilities have completely disappeared,” Trump said at the address of his elliptical office that aired.
A few days later, after a two-week deadline was voluntarily imposed, Trump’s decision to take part in Israel’s military campaign against major Israeli rivals represents a major escalation of the conflict.
Market Reaction: The only response was cryptocurrency, as most markets were closed. Ether fell by more than 5%, while Bitcoin soaked 1%.
Below are some comments from some financial analysts.
Mark Spindel, CIO, Potomac River Capital, Washington, DC:
“I think the market will be wary at first. I think oil will be high. There is no damage rating. It won’t take time. He explains it as ‘complete’, but we’re engaged.
“We have plenty of time to deliberate before the market opens on Sunday. We’re arrangements to talk to a few people tomorrow. When the dollar is opened for a deal in New Zealand, we get early signs. But this was a bold move.
Jamie Cox, Managing Partner, Harris Financial Group, Richmond, Virginia:
“Oil will certainly spike this first news, but it could level it out in a few days. With this power of this nuclear capability and its demonstration of complete annihilation, they could lose all leverage and push the escape button into the peace agreement.”
Mark Marek, Chief Investment Officer of Seabert Financial, New York:
“I think it’s going to be very positive for the stock market. If you asked me on Friday, I think I was hoping for two weeks of volatility with the market trying to analyze all the dribs and monotonous information coming out of the White House.
“So this is a relief, especially because it doesn’t seem like (the US) is seeking a long-standing conflict, but rather a situation that took place in one place.
Jack Ablin, Chief Investment Officer of Cresset Capital, Chicago:
“This adds a complex new layer of risk that we must consider and pay attention to… This will definitely affect energy prices as well, and potentially affect inflation.”
Saul Kavonic, Senior Energy Analyst, MST Markey, Sydney:
“This escalation could put enough pressure on Iran to accept trade that would retreat, rule out the conflict and bring down the oil price that would accompany it.
“More likely scenario: This US attack could see a huge fire in conflict, including Iran’s response, by targeting the interests of Iraqi regions.
“It depends heavily on how Iran responds in the coming hours, but this could be on the path to $100 oil if Iran responds as threatened before.
Rong Ren Goh, Portfolio Manager, East Spring Investments, Singapore:
“The US bombing of Iranian nuclear facilities marks a significant escalation in the Israeli-Iran conflict, introducing new phases of geopolitical risk and has direct US involvement that is likely to prolong tensions in the region.
“A significant vulnerability for Asian markets is their sensitivity to higher energy prices. Long-term conflicts increase the risk of supply disruption, provide inflationary pressures, and allow us to consider growth expectations across the region.
“With the outlook for a rapid resolution has decreased, investors may rediscover risks across the market. I hope that USD bids and widespread debilitating will be broadly based across Asian risk assets as the market assesses sustained geopolitical instability and potential fallout from rising oil prices.”
Alex Morris, Chief Investment Officer, F/M Investment, Washington, DC:
Morris expects crude to surge to more than $80 once trading resumes.
“It’s the next stop as a knee response. That’s why it happened on Saturday, and I don’t think it’s Sunday. There’s more to happen in the next 24 hours.”
Eric Bayrich, Portfolio Manager, Sound Income Strategy, Larchmont, New York:
“If there’s nuclear fallout – all bets are off. The administration is trying to conclude that they’ll lose everything and do all sorts of crazy things, such as commissioning terrorist attacks on the embassy.”
Christopher Hodge, Chief US Economist of Natixis, New York;
“There are many potential impacts, but strikes appear to be targeted, cautious and identified. If so, economic fallout should be contained if Iran’s oil export capacity is not compromised.
“The short-term oil price POP is seen by the Fed as a factor that increases tax input costs for consumers that curb demand and supplies inflation. We do not expect this to be considered in the Fed’s decision calculations unless the surge in oil prices is maintained.”
(Reporting by Saeed Azhar, Suzanne McGee, Scott Murdoch, Vidya RanganAthanconc by Peter Henderson and Vidya Ranganathan)
