How should investors navigate the impact on financial markets?

Investors are closely monitoring the situation amid growing fears of a full-scale war, and rising tensions between Iran and Israel are expected to cause instability in global markets. Uncertainty surrounding the geopolitical situation is likely to increase risk aversion among traders.

Analysts say there are clear concerns that escalating tensions could trigger panic selling across various asset classes as investors seek to reduce their exposure to geopolitical risks.

Stocks are already under pressure after the U.S. March inflation data dampened expectations that the Federal Reserve would cut interest rates significantly this year. Reports suggesting the Iran-Israel conflict could push oil prices above $100 per barrel could add to the negative mood among investors.

Also read | Iran-Israel war could push oil prices up to $100 per barrel.May cause panic selling and stock market volatility

Market expert Ajay Bagga said much of the impact on the market would depend on further escalation of the Iran-Israel conflict. “If Israel escalates further or Iran launches a new attack, markets will go into risk-off mode. Precious metals, safe-haven currencies and oil will rise, while risky assets will sell off,” Bagga said. wrote. At the X post.

Bagga said the market should expect some correction unless either Israel or Iran takes action tonight, adding that oil prices have already priced in most of the risks. “The only risk is Iran closing the Strait of Hormuz, which would interrupt the 17 megabytes per day of spillage and push oil prices above $100,” he told Moneycontrol.

Oil soared on Friday, with global benchmark Brent prices rising as much as 2.7%, topping $92 a barrel, a level last reached in the early days of the Israel-Hamas war.

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“Don’t lose sight of the big picture, which is that India will lead global growth and become a $10 trillion economy. Let’s have a 2030 target. Stick to the plan and when liquidity Please keep adding touches,” Chadha wrote.

Also read | Israel-Iran war: Impact of rising oil prices on external balance and rupee

Iran’s Revolutionary Guards seized a cargo ship in the Strait of Hormuz on April 13, saying it had ties to Israel, and Israel feared a direct attack by Iran, escalating a decades-old conflict between the regional rivals. We have put ourselves on high alert in anticipation of the possibility of this happening.

According to XM Australia CEO Peter McGuire, a major supply disruption through the Strait of Hormuz would be the perfect storm. It is important to closely monitor the Strategic Petroleum Reserve (SPR). If President Biden decides to replenish SPR globally, it could require an additional 200-300 million barrels or more, which could push prices higher, he said.

“The situation remains dynamic and subject to factors such as potential retaliation and developments in the Middle East situation.The coming week is expected to be volatile, with Brent prices likely to soar to $95 and gold prices will react to that by reaching over $2,450,” Maguire told Moneycontrol. .

Disclaimer: The views and investment tips expressed by investment professionals on Moneycontrol.com are their own and not the views of the website or its management. Moneycontrol.com advises users to check with certified professionals before making any investment decisions.