abzee
Mini drones? Missiles? From Israel? Elsewhere? The reports are still murky surrounding the explosions heard across the cities of Isfahan and Tabriz in Iran, but state media have played down the damage from the suspected attacks, while Tehran has lifted flight restrictions. There have also been reported strikes on air defense positions in southern Syria.
Whether the tensions will subside is anyone’s guess, but it appears that markets have gotten over any initial shock. Up over 4% immediately following the reports, WTI crude oil (CL1:COM) has come off its highs, trading only 1% higher at $83 a barrel. Stock futures linked to the Dow (DJI), S&P (SP500) and Nasdaq (COMP:IND) were also off more than 1% on the news, but have since trimmed those losses in half, while gold (XAUUSD:CUR) remains largely unchanged.
Just hours before the suspected retaliatory strike, S&P Global cut Israel’s rating by one notch, to A+ from AA-, joining Moody’s Investors Service in lowering the nation’s sovereign credit score.
“We forecast that Israel’s general government deficit will widen to 8% of GDP in 2024, mostly as a result of increased defense spending,” the agency said in a statement. “We expect a wider regional conflict will be avoided, but the Israel-Hamas war and the confrontation with Hezbollah appear set to continue throughout 2024 – versus our previous assumption of military activity not lasting more than six months.”
Two weeks ago, Fitch removed Israel from “Rating Watch Negative” and affirmed its A+ rating, with investors eying how the scores will impact Israel’s bonds and pressure on the shekel.
Related ETFs: BATS:IZRL, NYSEARCA:ITEQ, NYSEARCA:EIS, NYSEARCA:ISRA
