It's been quite a while since geopolitics, or in this case an outright war, in the Middle East stole the spotlight in markets. But that is the case today as the world is honed in on the Hamas attacks on Israel on Saturday. That is seeing markets adopt a more risk-off approach today with the dollar being bid while equities are lower, and oil prices are benefiting strongly.
US futures have opened with a gap lower, with S&P 500 futures down roughly 0.8% but at least not getting any worse in Asia.
The dollar is bid across the board mostly alongside the yen, with EUR/USD down 0.3% to 1.0550 and AUD/USD down 0.5% to 0.6350 currently. USD/CAD is able to hold its own, keeping flattish at 1.3660 as WTI crude is up nearly 4% to $86.05 on the day.
This latest round of drama is coming at a bit of a poor time for market players though. It is not only a Japan holiday today but the US bond market is also closed amid a partial holiday. And considering how much that Treasuries have been a key focus to broader markets as of late, it'll make it tricky to look into price action on the day and how long that can hold.
But as always is the case, I'd like to preach the idea of buying value and selling hysteria. As much as the US would like to get involved in all this and how this has been a significant escalation in recent tensions, this event will pass. The attention span of the world these days is extremely short-lived and markets tend to follow a similar view.
The future of the Middle East is definitely now highly uncertain but so was the case between Russia and Ukraine. And you can see how the latter is rather inconsequential to markets at the moment.
