“The Israel-Hamas war has not only caused immense human suffering, but it has also sent shockwaves through the financial markets, with investors closely monitoring the outcome of this crisis as it has the potential to significantly impact the stability of the region and global markets.”
Energy and defence-related investments are expected to yield positive returns in the next 12-18 months, according to analysts at BCA Research. The ongoing conflict between Israel and Hamas in Gaza is likely to spill over and cause a significant oil shock, prompting a spike in oil prices. BCA Research also predicts that the defence sector will see increased profits as the US and Europe increase defence spending. However, these investments should be viewed relative to other cyclical equities, as the global economy is expected to slow down in the coming year. While there has been a moderate impact on global financial markets and oil prices so far, there is a high risk of escalation in the Middle East crisis. The situation is different from previous crises due to Iran’s nuclear breakout capacity, which poses a strategic question for the US and Israel. Additionally, there is a looming possibility of a US recession, which would have a significant impact on global stability. Safe-haven investments such as gold, the dollar, Japanese yen, Swiss Franc, and US Treasury yields are recommended during times of crisis.