Srinivasan Sivabalan
2 min read
In This Article:
(Bloomberg) -- Middle Eastern stocks rose on Sunday, led by Israel and Egypt, as the region’s traders bet the US strikes on Iran may accelerate the end of the conflict between the country and Israel.
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Israel’s TA-35 benchmark index advanced 1.5%, posting a sixth successive day of gains and staying on course for the biggest quarterly advance since 2003. Egypt’s equity benchmark posted a 2.7% jump.
Other markets in the region recorded modest gains. The Boursa Kuwait Premier Market Index and the MSX30 Index in Muscat added 0.4% each. Qatar’s benchmark was 0.2% higher. Saudi Arabia’s Tadawul All Share Index fell 0.3%.
“Markets are focused on whether the war spreads to other countries and there is no evidence of that as yet,” said Hasnain Malik, a strategist at Tellimer in Dubai. “The benign interpretation is that the US intervention will accelerate the end of the war. That, of course, remains to be seen.”
In Israel, bank shares accounted for most of the gains, while defense supplier Elbit Systems Inc. dropped more than 2%.
“The market is displaying cautious optimism against the backdrop of the security reality,” Yaniv Pagot, vice president of trading at Tel Aviv Stock Exchange, said in a note. “The increases reflect an improvement in the risk premium of the State of Israel.”
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Bets for Volatility
Irrespective of early reaction in the Middle East, global investors are bracing for market turbulence that may trigger a dash into haven assets on Monday. Money managers are now watching out for Iran’s potential response, including whether it may attempt to block the Strait of Hormuz — a key passage for oil and gas — and whether it attacks US assets in the region.
“Short-term, markets such as crude oil will pivot on whether Iran retaliates and widens the war in a way that impacts oil supply versus backing down and offering concessions on its nuclear program,” Tellimer’s Malik said. “The biggest risk to the region is a collapse of the regime in Iran and a descent into Syrian-style civil war. US intervention may increase the probability of this.”
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