'Nuclear threat eliminated': why investors weren't spooked by US strike on Iran

The U.S. entry into the military conflict between Israel and Iran threatened a geopolitical crisis that could crash markets. But investors are hardly reacting. Analysts believe that the conflict will remain localized - and for some risky assets it may even turn into growth.

Markets reacted much more calmly to the U.S. air force bombing of three critical sites of Iran's nuclear program than to the Israeli airstrikes a week ago, reports CNBC. The MSCI World index, which reflects the performance of more than a thousand large and medium-sized companies from 23 developed countries, lost just 0.1%. The safe haven assets were mixed: the yen weakened against the dollar, gold also weakened, and the dollar itself slightly strengthened against a basket of other major currencies.

— «Рынки восприняли атаку как облегчение — ядерная угроза для региона устранена», — считает управляющий директор Wedbush Дэн Айвз. He notes that the likelihood of the Iran-Israel war spreading to neighboring countries is minimal, and the conflict itself remains «isolated.»

- Despite the seriousness of what's happening, it no longer seems like a risk to global markets, other economists agree. «It all depends on Iran's reaction,» Bleakley Financial Group investment director Peter Boockvar told CNBC. - If it gives up its nuclear ambitions, the conflict could end and markets would be fine.» Boockvar does not expect Iran to actually try to block the Strait of Hormuz, the world's most important oil transportation route.

- In the opinion of Marko Papich, chief strategist at GeoMacro Strategy, the worst-case scenario - closing the strait - is unlikely. If Iran does so, he said, oil prices will soar above $100, stocks will plunge at least 10%, and investors will rush to safe haven assets. But the markets remain calm: Tehran has few tools for a serious «retaliation,» he emphasized.

- The suddenness and decisiveness of the U.S. attack was unexpected but a positive signal for markets because it removed uncertainty, Siebert Financial chief investment officer Mark Malek said. «I think it will have a very positive impact on the stock market (...), especially since it looks like a one-off operation rather than an attempt (by the U.S.) to start a long and protracted conflict,» predicted Malek.

- The subdued demand for defensive assets suggests that investors see the U.S. strike on Iran as an isolated escalation rather than a threat to global oil supplies or world trade, said Charu Chanana, chief investment strategist at Saxo Bank. The reaction of the markets may be related not so much to the fact of the strike itself, but to perception: if Iran's nuclear program is really seriously undermined, it may be perceived as a hidden de-escalation - not an increase in geopolitical risk, but its elimination, the economist explained.

Cramer Berkowitz hedge fund founder and CNBC anchor Jim Cramer recommended investors not to rush into buying at the opening of trading in New York. He said it's optimal to buy out the drawdown an hour after the open and an hour before the close - closer to 10:30 a.m. and around 3:30 p.m. North American Eastern Time. Cramer is attracted by the securities of technology companies - Cisco, IBM, Amazon and Netflix - as well as Tesla amid the launch of robotaxis. He doesn't advise investing in «classic defensive» stocks like Procter & Gamble or Johnson & Johnson, as well as General Mills and other food manufacturers. As for oil stocks - they should be sold rather than bought, added Cramer.

This article was AI-translated and verified by a human editor