By Federico Maccioni and Alun John
DUBAI/LONDON (Reuters) – Gulf markets fell slightly on Sunday, a first sign of investor reaction to Iran's unprecedented attack on Israeli territory, as investors prepared for trading in most markets. They will resume on Monday, with an eye especially on oil.
Activity could be choppy as traders are also digesting last week's global macroeconomic data, most importantly higher-than-expected US inflation.
Saudi Arabia's benchmark stock index closed down 0.3%, recovering from a steeper earlier decline, while Qatar's main index was down 0.8%.
Shares in the Tel Aviv broad index rose 0.3%.
Iran launched explosive drones and missiles at Israel on Saturday in retaliation for an alleged Israeli attack on its consulate in Syria, and warned Israel and the United States on Sunday of a “much greater response” if there is any retaliation.
Israel said that “the campaign is not over yet.”
“The question is: Is Israel looking to expand the conflict? That's the wild card,” said Tina Fordham, geopolitical strategist at Fordham Global Foresight in London, adding that she expects oil to open higher on Monday.
Oil prices were already supported last week by concerns about an Iranian response, helping send the global benchmark price on Friday to $92.18 a barrel, the highest level since October.
Some safe-haven assets also gained on Friday as traders are cautious about exposing themselves to weekend developments when markets are closed. The benchmark index, which moves inversely to its price, fell almost 8 basis points, its biggest daily drop in a month. (US/)
Meanwhile, gold rose above $2,400 an ounce, the latest in a string of all-time highs. (GOAL/)
one of the few assets that trade 24 hours a day, fell 8% in about 20 minutes to settle below $62,000 around 2000 GMT on Saturday when reports emerged that the attack was underway.
It has since regained some ground and was last trading around $64,500.
FRAGILE ENVIRONMENT
But geopolitics won't be the only thing worrying investors on Monday.
“The news flow is about Iran and Israel, so that will be the majority (of what people will discuss on Monday), but we are still in an environment where we have not yet digested the news about US inflation.” and what that means for the country. Federal Reserve,” Samy Chaar, chief economist at Geneva-based Lombard Odier, said on Sunday.
“We come to this weekend of geopolitical tension after the CPI report. “It's a fragile market environment in the short term, but after a fantastic period, it's only fair that there is a bit of vulnerability.”
Since Iran-backed Hamas attacked Israel on October 7 and Israel invaded Gaza in response, the MSCI global stock index has hit new highs, helped by resilient economic data, particularly in the United States, and expectations that major central banks They will cut interest rates.
Saudi Arabia's main index is up about 20% since October 8. Qatar's benchmark index is trading at around the same level as on October 8.
And with geopolitics being just one difficult-to-predict factor to consider, some international investors are focusing on the broader economic picture.
“I'm not going to be an armchair general and pretend I have an advantage on how the rally will play out,” said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore.
“In our view, the most important news for markets last week was the reacceleration of the trend in consumer price inflation and the implications for the path of future short-term interest rates.”
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