US stocks rose, with the S&P 500 climbing 1% and oil tumbling 7.2% as investors expect a limited response from Iran after the US strikes on Israel. The Dow Jones Industrial Average added 374 points, while the Nasdaq composite gained 0.9%. Analysts believe Iran will not disrupt global oil flows, citing the country’s reliance on China for crude sales.
The price of benchmark US oil dropped to $68.51 after briefly topping $78 in early trading on Monday. This followed a sharp loss as investors shifted their focus from US military actions to how Iran would react. Iran announced a missile attack on Al Udeid Air Base in Qatar, which is used by the US military.
Despite concerns about potential Iranian retaliation, analysts point out that Iran’s oil exports are crucial to its economy and that it relies heavily on international trade. This makes a drastic closure of the Strait of Hormuz, through which 20% of global oil needs pass, highly unlikely.
Some analysts predict a short conflict with limited consequences for the global economy. However, others warn that an Iranian backlash could lead to higher oil prices, inflation, and interest rate hikes by the Federal Reserve. In the bond market, Treasury yields eased as Fed Governor Michelle Bowman expressed support for cutting rates at the next meeting if “inflation pressures remain contained.”
Source: https://apnews.com/article/stock-market-oil-iran-attack-2d05b0a9e52320e822b649b8e29d28aa