New York, Oct 28 (The Street Press) – Investors are keeping a close eye on the weekend to see if the situation in the Middle East gets worse. This could make the markets more unstable, especially when there’s already a lot happening next week, like the Federal Reserve’s announcement and Apple’s financial results.
On Friday, Israeli air and ground forces increased their activities in the Gaza Strip, approximately three weeks after a serious attack by the Islamist organization, Hamas.
Investors have become increasingly concerned about the expanding conflict in recent days. The U.S. deployed more military resources to the Middle East, and there were Israeli attacks in Gaza, as well as actions against Hamas supporters in Lebanon and Syria. This situation is causing a lot of anxiety, as noted by Randy Frederick, managing director of trading and derivatives for Charles Schwab.
Regarding your question about terrorist organizations, Hamas is considered a terrorist organization by several countries, including the United States, Israel, and the European Union. It’s important to note that the designation of terrorist organizations can vary depending on the country and its policies.
On Friday, Brent oil futures closed 2.9% higher at $90.48 per barrel due to worries that the conflict could disrupt oil supplies. Meanwhile, spot gold, a favored safe haven for concerned investors, surpassed $2,000 for the first time since mid-May.
Analysts at Capital Economics noted in a Friday report that the oil market’s reaction to the conflict had been relatively restrained up to that point.
The analysts pointed out that if neighboring countries in the region become more entangled in the conflict, it could lead to a significant surge in oil prices.
Additionally, Peter Cardillo, the chief market economist at Spartan Capital Securities, mentioned that if the conflict escalates to the point where the U.S. increases military spending, it could further elevate the deficit and push Treasury yields even higher, potentially surpassing the 16-year highs they have already reached.
Some investors anticipate that an escalating conflict could trigger a surge in safe-haven purchases of U.S. Treasuries. This could potentially mitigate the rise in yields, which move inversely to bond prices, and consequently alleviate pressure on stocks and other assets.
The S&P 500 has experienced a decline of more than 10% since late July, when it reached its high for 2023, but it remains up by over 7% year-to-date.
UBS Global Wealth Management noted on Friday that U.S. government bonds haven’t been serving their typical safe-haven role so far. However, they suggested that an escalation of the conflict might redirect attention away from concerns related to monetary policy and increase the demand for Treasuries as a safe haven.
The Cboe Volatility Index has increased in response to the conflict and neared seven-month highs on Friday.
In the upcoming week, the Federal Reserve is scheduled to issue its latest monetary policy statement on Wednesday, and Apple’s quarterly results will be a significant highlight in what promises to be another busy week for corporate reports.
