This weekend’s news, that the U.S. had bombed Iran, may have shocked some, but it didn’t quite shock markets.
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People familiar with the ebbs and flows of geopolitical catalysts likely predicted early on that Monday would see volatility in oil and gold markets.
And while that was the case, the trading response was measured.
As of ASX Market Close on Monday, the ASX200 dropped around -0.3% today, and Brent Crude prices only increased by around US$1.00/bbl.
Gold, meanwhile, was down -0.4% to US$3,355.xx/oz as of 4.10pm AEST time.
While it’s fair to say the gold response is maybe counterintuitive, the safe-haven metal has been tracking sideways for a while now.
So let’s look back at Australia and tie in another safe haven asset: Shares in Commonwealth Bank (ASX:CBA). The market’s largest stock – and the world’s most expensive bank equity – recently clocked a market cap over $300 billion.
It’s currently sitting at over $308B, even after the USA’s actions in Iran over the weekend.
Red in intraday trades, CBA stock has actually ended back in the green for Monday’s Week 26 close, suggesting the ASX 200 is confident in the local bourse to remain a safe place to place cash (so long as you accept the CBA share price can be considered an indicator, which in my view, it can).
Zooming back out to a global view, it’s also worth noting S&P 500 futures are in the red, but, as of 4.15pm AEST, the S&P is tipped to decline -0.14%.
I don’t know about you, but that sounds a lot like “flattish red” to me.
The big things to watch this week will be whether Iran blocks the Strait of Hormuz, a major oil shipping corridor, which many expect is more likely to become a thing of Iranian retaliation rather than major military escalation.
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Should that occur, it will be worth watching what oil prices do in response. To be sure, it looks like a lot of risk was priced in last week before the U.S. got involved in Iran – and when they did, the response was subdued.
That, to me, says many were expecting the U.S. to get involved.
By the way: Where’s the world at with tariff negotiations?
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