Original title: Why is the global market still calm despite the US's actions against Iran?
Analysts believe that although the situation in the Middle East has escalated, it does not pose a systemic threat to the global markets, and thus the market remains calm. Investors generally expect that the military intervention by the Trump administration will be brief, with the primary goal of deterrence rather than a prolonged conflict, and Iran's countermeasures are also quite "limited," with expectations that the country will not take actions that disrupt global oil supplies.
Why did the US strikes on Iran's nuclear facilities not shake the global market?
On June 21 local time, U.S. President Trump posted on his social media platform "Truth Social" that the U.S. has completed strikes on three nuclear facilities in Iran: Fordow, Natanz, and Isfahan, stating that "Iran's Fordow (nuclear facility) no longer exists."
However, the global financial market's reaction to the U.S. attack on Iran's nuclear facilities has been relatively mild. On Monday, U.S. stock futures opened lower but narrowed their losses, while crude oil and gold rose before falling back into decline. As of 1 PM, the global MSCI index was down only 0.12%.
Traditional safe-haven assets show divergent performance, with the Japanese yen falling 0.64% against the US dollar, spot gold prices slipping 0.23% to $3360 per ounce, and the US dollar index rising 0.35%.
Analysis suggests that the market volatility after this U.S. military action is noticeably smaller, mainly because investors expect that the Trump administration's military intervention will be brief, with the primary goal being deterrence rather than a long-term conflict.
Geopolitical risks are considered manageable
The market's mild reaction to U.S. military actions is primarily due to investors' optimistic expectations regarding the scope of the conflict.
Dan Ives, managing director at Wedbush, stated that the market will view the attack on Iran as good news, as the nuclear threat in the region has been eliminated.
He further stated that there are currently no signs of the Iran-Israel conflict spreading to a wider region, and the impact of the events is relatively "isolated."
Other industry experts generally believe that, despite the seriousness of the situation, it does not pose a systemic threat to the global market, and investor confidence has therefore not been severely impacted.
Peter Boockvar, Chief Investment Officer of Bleakley Financial Group, pointed out that everything depends on how Iran responds. If Iran accepts the end of its military nuclear program, this could signal the end of the conflict, and the markets would remain stable.
According to Boockvar's view, Iran will not take actions that would disrupt global oil supplies.
Bank of America Chief Investment Strategist Michael Hartnett expects that even if the U.S. takes military action against Iran, it will be short-lived, as Trump does not want U.S. gasoline prices to exceed $4 per gallon.
Hartnett expects that Trump will continue to pressure Russia and Saudi Arabia to increase oil production.
What are the risks of Iran's countermeasures? The Strait of Hormuz becomes the focal point
Despite the Iranian parliament's approval of a resolution to close the Strait of Hormuz causing concern, the market did not overreact to it.
Experts generally believe that the likelihood of Iran actually closing the Strait is low.
Marko Papic, Chief Strategist at GeoMacro Strategy, stated that the market remains calm primarily because Iran's countermeasures are "limited." If Iran were to indeed close the Strait, oil prices would rise above $100, panic would take over the market, stocks would drop by at least 10%, and investors would flock to safe-haven assets—but this scenario is unlikely to occur.
Historical data also supports this judgment, as Iran has previously threatened to close the Strait of Hormuz multiple times but has never taken action.
After the United States withdrew from the nuclear agreement and reimposed sanctions in 2018, Iran issued similar threats. In 2011 and 2012, senior Iranian officials, including then Vice President Mohammad-Reza Rahimi, also stated that if Western countries imposed more sanctions on Iran's oil exports due to nuclear activities, they might close the waterway.
Papic pointed out that Tehran understands that if they close the strait, it will provoke a "swift, punitive, and brutal" response from the United States.
Three Possible Scenarios for Oil Prices After the U.S. Takes Action
Morgan Stanley has proposed three scenario frameworks in its latest report to assess the impact of geopolitical risks on oil prices. The bank's commodity analyst Martijn Rats believes that these three scenarios will determine the future trend of oil prices.
The first scenario assumes that military conflict will not disrupt the flow of oil. If exports from the region remain unaffected, Brent crude prices could fall back to $60 per barrel. The second scenario considers the possibility of a significant reduction in Iranian exports, which could eliminate the global supply surplus next year, with oil prices trading in the range of $75 to $80.
The third scenario is that expected conflicts may ultimately pose risks to oil exports in the broader Gulf region. In this case, high oil price levels similar to those in 2022 are not impossible. In 2022, influenced by the Russia-Ukraine conflict, international oil prices soared to around $140 at the beginning of the year.
The line points out that the key to the trend in oil prices lies in whether the price changes are temporary or permanent. Although the recent rise in oil prices has raised concerns, the increase is relatively moderate compared to early April. WTI crude oil futures prices have risen about 10% over the past week, while Brent crude oil futures have increased by 18% since June 10.
The long-term outlook for the US stock market remains optimistic
Some analysts believe that the latest geopolitical events will not change the long-term upward trend of the US stock market.
Ed Yardeni, founder of Yardeni Research, stated that this incident has not shaken his confidence in the U.S. bull market.
He believes that Trump has re-established America's deterrent power through military action, enhancing the credibility of the slogan "peace through strength," and expects the S&P 500 index to reach 6,500 points by the end of 2025.
Yardeni also pointed out that with the destruction of Iran's nuclear facilities, the Middle East may welcome a "fundamental transformation." Although the market may fluctuate in the short term due to uncertainty, in the long run, if the conflict is contained, investor confidence is expected to further recover.
Currently, the market's low expectations for Iran's countermeasures and the judgment that the conflict is manageable jointly support this cautiously optimistic sentiment.
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Why are global markets not panicking after Trump suddenly "attacked" Iran?
Source: Wall Street Watch
Original title: Why is the global market still calm despite the US's actions against Iran?
Analysts believe that although the situation in the Middle East has escalated, it does not pose a systemic threat to the global markets, and thus the market remains calm. Investors generally expect that the military intervention by the Trump administration will be brief, with the primary goal of deterrence rather than a prolonged conflict, and Iran's countermeasures are also quite "limited," with expectations that the country will not take actions that disrupt global oil supplies.
Why did the US strikes on Iran's nuclear facilities not shake the global market?
On June 21 local time, U.S. President Trump posted on his social media platform "Truth Social" that the U.S. has completed strikes on three nuclear facilities in Iran: Fordow, Natanz, and Isfahan, stating that "Iran's Fordow (nuclear facility) no longer exists."
However, the global financial market's reaction to the U.S. attack on Iran's nuclear facilities has been relatively mild. On Monday, U.S. stock futures opened lower but narrowed their losses, while crude oil and gold rose before falling back into decline. As of 1 PM, the global MSCI index was down only 0.12%.
Traditional safe-haven assets show divergent performance, with the Japanese yen falling 0.64% against the US dollar, spot gold prices slipping 0.23% to $3360 per ounce, and the US dollar index rising 0.35%.
Analysis suggests that the market volatility after this U.S. military action is noticeably smaller, mainly because investors expect that the Trump administration's military intervention will be brief, with the primary goal being deterrence rather than a long-term conflict.
Geopolitical risks are considered manageable
The market's mild reaction to U.S. military actions is primarily due to investors' optimistic expectations regarding the scope of the conflict.
Dan Ives, managing director at Wedbush, stated that the market will view the attack on Iran as good news, as the nuclear threat in the region has been eliminated.
He further stated that there are currently no signs of the Iran-Israel conflict spreading to a wider region, and the impact of the events is relatively "isolated."
Other industry experts generally believe that, despite the seriousness of the situation, it does not pose a systemic threat to the global market, and investor confidence has therefore not been severely impacted.
Peter Boockvar, Chief Investment Officer of Bleakley Financial Group, pointed out that everything depends on how Iran responds. If Iran accepts the end of its military nuclear program, this could signal the end of the conflict, and the markets would remain stable.
According to Boockvar's view, Iran will not take actions that would disrupt global oil supplies.
Bank of America Chief Investment Strategist Michael Hartnett expects that even if the U.S. takes military action against Iran, it will be short-lived, as Trump does not want U.S. gasoline prices to exceed $4 per gallon.
Hartnett expects that Trump will continue to pressure Russia and Saudi Arabia to increase oil production.
What are the risks of Iran's countermeasures? The Strait of Hormuz becomes the focal point
Despite the Iranian parliament's approval of a resolution to close the Strait of Hormuz causing concern, the market did not overreact to it.
Experts generally believe that the likelihood of Iran actually closing the Strait is low.
Marko Papic, Chief Strategist at GeoMacro Strategy, stated that the market remains calm primarily because Iran's countermeasures are "limited." If Iran were to indeed close the Strait, oil prices would rise above $100, panic would take over the market, stocks would drop by at least 10%, and investors would flock to safe-haven assets—but this scenario is unlikely to occur.
Historical data also supports this judgment, as Iran has previously threatened to close the Strait of Hormuz multiple times but has never taken action.
After the United States withdrew from the nuclear agreement and reimposed sanctions in 2018, Iran issued similar threats. In 2011 and 2012, senior Iranian officials, including then Vice President Mohammad-Reza Rahimi, also stated that if Western countries imposed more sanctions on Iran's oil exports due to nuclear activities, they might close the waterway.
Papic pointed out that Tehran understands that if they close the strait, it will provoke a "swift, punitive, and brutal" response from the United States.
Three Possible Scenarios for Oil Prices After the U.S. Takes Action
Morgan Stanley has proposed three scenario frameworks in its latest report to assess the impact of geopolitical risks on oil prices. The bank's commodity analyst Martijn Rats believes that these three scenarios will determine the future trend of oil prices.
The first scenario assumes that military conflict will not disrupt the flow of oil. If exports from the region remain unaffected, Brent crude prices could fall back to $60 per barrel. The second scenario considers the possibility of a significant reduction in Iranian exports, which could eliminate the global supply surplus next year, with oil prices trading in the range of $75 to $80.
The third scenario is that expected conflicts may ultimately pose risks to oil exports in the broader Gulf region. In this case, high oil price levels similar to those in 2022 are not impossible. In 2022, influenced by the Russia-Ukraine conflict, international oil prices soared to around $140 at the beginning of the year.
The line points out that the key to the trend in oil prices lies in whether the price changes are temporary or permanent. Although the recent rise in oil prices has raised concerns, the increase is relatively moderate compared to early April. WTI crude oil futures prices have risen about 10% over the past week, while Brent crude oil futures have increased by 18% since June 10.
The long-term outlook for the US stock market remains optimistic
Some analysts believe that the latest geopolitical events will not change the long-term upward trend of the US stock market.
Ed Yardeni, founder of Yardeni Research, stated that this incident has not shaken his confidence in the U.S. bull market.
He believes that Trump has re-established America's deterrent power through military action, enhancing the credibility of the slogan "peace through strength," and expects the S&P 500 index to reach 6,500 points by the end of 2025.
Yardeni also pointed out that with the destruction of Iran's nuclear facilities, the Middle East may welcome a "fundamental transformation." Although the market may fluctuate in the short term due to uncertainty, in the long run, if the conflict is contained, investor confidence is expected to further recover.
Currently, the market's low expectations for Iran's countermeasures and the judgment that the conflict is manageable jointly support this cautiously optimistic sentiment.