Investor Caution Amid Middle East Tensions: Oil Prices Surge

Iran's recent attack on Israel has heightened geopolitical tensions, causing oil prices to surge and investors to seek safe havens such as gold, bonds, and the Swiss franc. Market responses remain cautious as they await Israel's reaction. Further conflict could impact global energy prices and complicate central bank policies.

Iran's recent attack on Israel has reignited demand for safe-haven assets, leading to a surge in oil prices. Investors remain cautious as they wait for Israel's response, questioning whether Iran's strike signifies an escalation or a one-off reaction.

Mohit Kumar, strategist at Jefferies, termed the investor reaction "guarded" while awaiting Israel's next move. Classic safe-haven assets like gold, government bonds, and the Swiss franc saw significant gains, while oil prices hit $75 per barrel. The uncertainty has prompted calls for low-risk investment strategies.

Charu Chanana of Saxo Bank emphasized the need for portfolios to adapt to both immediate market volatility and long-term impacts. Concerns are rising about oil prices and potential energy price hikes globally, leading to complications for central banks aiming to lower borrowing costs. Geopolitical risks continue to keep investors on edge, with other potential catalysts such as the upcoming U.S. election also in focus.

(With inputs from agencies.)