Israel Iran War: Markets in a Tizzy, Stocks Dive Down, Gold and Silver Move Up, What Lies Ahead For India?

The rapidly worsening conflict between Iran and Israel has caused chaos in the world's financial markets. Israel dropped a lot of bombs on Iran's nuclear weapons and military bases on June 13. This made people worry that there might be a long war in the Middle East.  

How Have Asian Market Behaved?

There were a lot of different stocks in Asia on June 14, 2021. The Nikkei, Hang Seng, and Kospi all started very badly, which shows that investors were already scared. Stocks in Asia fell between 0.8% and 1.3%, and futures options on U.S. stocks also went down. However, the price of oil went up. The price of oil has been all over the place because investors were afraid that Iran would take action against oil producers.

Gold and silver current rate- moved up

As you might expect during times of global unrest, the price of gold went through the roof. Around $2,383 an ounce, the yellow metal rose almost 1.3%, making it the most expensive it has been in over a week. Silver prices also slowly went up, getting closer and closer to the psychologically important $30 per ounce mark. 

How has Indian market reacted

The Indian market was also hit hard. The Indian Rupee fell and for the first time in months,h s broke through the ₹86/USD level. Rising prices for crude oil have made people worry about India's trade imbalance and inflation. Usually, when oil prices go up by $10, the current account gap goes up by 0.4% and inflation goes up by 35 basis points. Fearing more instability, foreign investors responded quickly and pulled nearly $300 million out of Indian stocks and bonds.

Companies that sell oil, like IOCL and BPCL, also felt selling pressure as the price of crude oil went up, and this hurt their profit forecasts.

What lies ahead

Iran has already said that it will respond in a "harsh and decisive" way. Since things are tense in the Middle East, markets are expecting more stress in the next few days. If Iran responds strongly, oil prices could go above $90 per barrel, which would have more negative effects on the world economy. Rate cuts might have to be put off, or monetary policy might have to be tightened again by central banks.

Israel-Iran war

The war between Israel and Iran is not only a political problem, but also a risk to the world's economy. You can already see the effects: Asian stock prices are going down, gold prices are going up, and the Indian Rupee is getting lower. During this unstable time, investors should stay alert, spread out their holdings, and pay close attention to both global news and central bank signals.