Israel-Hamas war impact on Brent crude, gold, stock markets

Global oil benchmark Brent crude rose sharply by 3.32 per cent to $ 87.39 a barrel on Monday in the aftermath of Israel-Hamas war. While, price of 24 carat gold of 999 purity jumped one per cent and traded on the first day of the week at Rs 57,530/ 10 gm. Silver prices too increased by Rs 460 and was trading at Rs 68,820/kg by 3 pm. Equity benchmark index Sensex plunged 483 points and closed 0.73 per cent lower below Rs 65,520 points. Broader index Nifty closed in red below 19,520 points. Earlier the benchmark indices had opened with marginal gap downs in the morning trade on Monday.

What is the way ahead?
There is a lot of uncertainty on impact of Israel-Hamas conflict on the stock market. European and Asian stocks came under pressure on Monday. As far as commodity prices are concerned. It is expected that due to rising uncertainty in global market, people might choose to park their money in safe heavens like gold. This is what led to rise in gold prices today.

Two things to focus on:

1. Iran’s actions
While, due to OPEC+ supply cut decision and chances of fresh tightening of US sanctions on Iran (if Iran openly comes in support of the Hamas terrorist group), supply of crude oil may take a hit, pushing prices beyond $100 a barrel level. Rise in crude oil prices might not augur well for equities leading to sell-off in equity markets.

2. War escalation
Investors need to be watchful of how things turn up in the Middle East. If the war expands beyond the geographical regions of Israel and Palestine. If other oil-producing nations get involved in the conflict, then, this may also lead to supply constraints of crude oil leading to price hikes and equity market downturns.

But as of now, these two possibilities don’t look certain. But if things take ugly turn, then, get ready for fresh sell-off in equity markets.