Middle east escalation unsettles financial markets

Middle East escalation unsettles financial markets

Iranian missile attacks on U.S. Bases in iraq unsettled financial markets wednesday and weighed on riskier assets like stocks.

However, the markets calmed down again after initially violent reactions. Oil prices initially rose sharply due to the crisis in the middle east, but then recovered somewhat. Investors once again preferred safe havens for investment – so the crisis currency gold picked up again.

Although the german leading index dax was up almost one percent in the first minutes of trading towards the mark of 13.000 points, but then caught up and at times even moved clearly into positive territory. Most recently, it leveled off at 13.234.10 points at about the same level as the previous day. This corresponded to a gain of 0.05 percent.

In contrast, the mdax with the medium-sized german stocks settled in the afternoon at 28.246.50 points, with a slight minus of 0.14 percent. The same was true of the eurozone’s leading index, the eurostoxx, which stood at 3755.84 points. In new york, the wall street barometer dow jones industrial headed for moderate losses.

Analyst jim reid of deutsche bank pointed out that u.S. President donald trump has been reluctant to take action against iran in the past when no u.S. Citizens have been killed in iran attacks. "This gives some hope that the conflict in the middle east region will not escalate completely."Trump had still announced a declaration for wednesday. Previously, he had declared in a tweet: "everything is good!"

According to market expert andreas lipkow of comdirect bank, investors are betting that iran could be satisfied with the retaliatory action. Investment head mark haefele of UBS also does not believe in a far-reaching escalation.

The rashes at the asian borsen were more violent before. The nikkei index of the leading stock exchange in tokyo fell by about 370 points, or 1.6 percent, to close trading at 23.204.76 points. In the meantime, the borsen barometer had fallen below the mark of 23.000 points down.

In china, the shanghai composite index posted a discount of 1.22 percent at 3066.89 points. The shenzhen component index declined by 1.13 percent at the level of 10.706.87 from the market. The hang seng index in hong kong fell 0.83 percent, or 234.14 points, to 28.087.92 points. Losses also in south korea: there, the leading index kospi on the stock exchange in seoul fell by 24.23 points or 1.1 percent to the level of 2151.31.

The fluctuations on the stock market were inversely reflected in oil prices. At first, they continued to rise on worries about delivery shortages, which also weighed on the shares of european airlines. In the course of trading, however, the trend also turned on the oil market. Lufthansa shares did not make it into the plus zone, however, remaining among the losers with half a percent.

In addition to the rising price of oil as a burdening factor, the crisis in the middle east also made air travel more difficult. Airlines suspended flights through and announced avoidance of iranian and iraqi airspace. The U.S. Federal aviation administration (FAA) banned domestic airlines from flying over iraq, iran, the persian gulf and the gulf of oman. However, it remains to be seen how strongly the new situation will affect passengers and airlines.

Against the background of tensions in the middle east, many investors are buying gold, which is considered to be stable in value. In the night to wednesday, the price of a fine ounce (about 31.1 grams) rose above the mark of 1600 U.S. Dollars for the first time since 2013. At noon the price fell back slightly to 1580 dollars. But this was still about six dollars more than the day before.

In euro terms, the gold price reached a new record high of 1443 dollars. According to precious metals trader alexander zumpfe from the trading house heraeus, the market sentiment was allowed to remain positive. After the recent high, he does not expect a significant correction in the gold price in the short term.

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