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Safe-haven assets and stocks make gains amid conflict in Israel

The conflict in Israel and the Gaza Strip intensified at the start of the week with Israel calling up 300,000 reservists and blockading the Gaza Strip. That uneased investors who interpreted the moves as a sign of a possible ground invasion. Safe-haven assets were up to start the week. Wall Street initially suffered losses but closed in positive territory while Asia stocks continued with Wall Street’s gains on Tuesday.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
Israel map
© Shutterstock

Investors took positions in safe-haven assets on Monday particularly in preparation for any wider escalation of the conflict beyond Israel. Oil and Treasuries were up. Gold increased about 1% versus the US dollar to start the week after making gains already on the weekend. The greenback strengthened against the euro. The Israeli shekel lost some ground against the US dollar, even after the Bank of Israel said it would sell foreign currency reserves worth 30 billion dollars to stabilize the shekel.

Investors are keeping an eye on any signs that the conflict could spill over beyond Israel and the Gaza Strip. In the meantime, the US has also confirmed that American citizens have been killed in the conflict and others are missing. The US have moved an aircraft carrier group to the eastern Mediterranean in response to the Hamas attack and is supporting Israel with supplies but is not planning to put its own troops on the ground, according to the White House.

In New York, the major stock indices started the week’s first session in the red, but concerns about the conflict in Israel faded away during the day. Dovish comments from top officials at the Federal Reserve boosted bond prices and stocks later in the session. Oil and defence stocks were among the day’s biggest winners. The Dow Jones Industrial and S&P 500 both finished the session up about 0.6%. The Nasdaq-100 gained 0.5%.

In the Asia-Pacific region, the geopolitical uncertainty was barely noticeable in investor sentiment with stock markets trading mostly up on Tuesday. Tokyo’s Nikkei 225 led gains, up 2.4%. Hong Kong's Hang Seng Index was also strong, trading up 1.2%, while the Shanghai Composite lost 0.5%. Country Garden stock slipped 6% in Hong Kong trading after the property developer at the heart of the Chinese real estate crisis warned it may have troubles paying offshore debt obligations. In South Korea, the Kospi lost 0.2% and in Australia’s S&P/ASX 200 was up 1%.

Corporate news in focus: Q3 figures from PepsiCo and LVMH, Procter & Gamble annual general meeting, HP Capital Markets Day.

Economic data in focus: Italian industrial production (10:00 CET), European Central Bank President Christine Lagarde speaks at the International Monetary Fund / World Bank annual meetings in Marrakesh (14:00), International Monetary Fund World Economic Outlook.


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.