US markets showcased resilience despite the mounting pressures from the Israeli-Gaza conflict. Early apprehensions quickly metamorphosed into a surge, with the Dow climbing by 0.5% to settle at 33,604.65; the S&P 500 saw a rise of 0.6% reaching 4,335.66, while the tech-dominated Nasdaq recorded a gain of 0.4%, ending the day at 13,484.24. Impressively, the two indices replicated similar feats following a brief downwards trend before they rebounded with assurance.
Predictably, the tension brewing between Israel and the Gaza propagated a slight bearish sentiment, triggering fears of volatility that might shake the market. But as events unfolded, the market seemed to digest this with poise, quickly shifting the bearish sentiment off its shoulder.
Against this backdrop lay an interesting paradox. Defense-related companies such as Lockheed Martin, enjoyed a surge, increasing by 8.5% and Northrop Grumman Corp gaining 11%. This rise was backed by the anticipation of high returns generated by rising oil prices, despite an initial fear of market volatility. Gold was not left out of the unconventional rally, spurred by the tumult, with a rise of $13.59, equivalent to 0.74%, to reach $1,861.53.
Interestingly, oil also marked its territory in the bullish rally, with West Texas Intermediate recording an impressive 4.24% gain of the day to close at $86.29. Brent crude wasn’t far off either, with a 4.09% gain to close at $88.05. A report by GasBuddy that revealed a drop in the US gasoline prices by $0.11 per gallon barely made a ripple in the bullish wave that was gripping the oil market.
In tandem with this, the US Dollar Index rose slightly by 0.03% to 106.08, causing a concurrent drop in the euro of 0.2220% to 1.0566. The yen gained 0.5138%, which meant the number of yen required to buy a dollar rose to 148.5070.
Taking a retrospective glance, the yen had been trading sideways since September 25. This came in the wake of a decision by the Bank of Japan to interfere if the Japanese currency took a plunge. It is worth noting that before this date, the Yen had lost 13% of its value since the year’s commencement. Is this a cautious strategy by the Bank of Japan to prevent further depreciation of the Yen? Only time shall reveal the answers.
In conclusion, an early forecast of a bearish run due to international tensions was dispelled as the US markets rose and defense-related companies, oil, and gold experienced gains. On the other hand, the rise in the US Dollar Index led to a fall in the euro while the yen achieved a moderate gain, revealing how interconnected and unpredictable the financial world can be.
Source: Cointelegraph
