Iran’s attacks: Markets ‘taking it in their stride’
New Zealand and global financial markets appeared to take Iran’s retaliatory attacks on Israel largely in their stride yesterday morning.
Hamilton Hindin Greene investment adviser Jeremy Sullivan said the United States’ Vix index — often used as a proxy for investors’ fears — was at a six-month high but there was no sign of panic in the wake of the weekend drone and missile attack on Israel.
The Vix index tracks how volatile investors expect the US S&P share index will become, based on investors’ options trades.
The NZX top 50 index was down 0.8% in early-afternoon trading yesterday, which is within the usual range of fluctuations, while the US S&P 500 futures index was up 0.3% at 5180 and the Australian ASX200 index was down 0.5%.
Oil prices were relatively steady, with the May futures price of West Texas Intermediate crude oil little changed at just over US$85 a barrel after briefly spiking by a few dollars in the wake of the attacks.
Similarly, the price of gold returned to US$2378 an ounce, about where it was before spiking to US$2444 an ounce.
Sullivan said currency markets were usually quick to react to geopolitical concerns, with the New Zealand dollar tending to suffer.
The kiwi dollar was trading at a six-month low of US59.4 cents yesterday afternoon, but that was only a few tenths of a US cent below its weekend close.
Sullivan believed the market response reflected the limited nature of the Iranian attacks, which followed the bombing by Israel of an Iranian consulate in Syria in which several senior Iranian military commanders were killed.
“Sure it's an escalation, but it was expected.
“The attack itself was very much within the means of defence of Israel’s ‘iron dome’ and the amount of missiles that made it through was very slim on early reports,” he said. “Markets are obviously watching it very closely, but taking it in their stride.”