How scary is geopolitical risk? Oil price is key

THE US-Israel strikes on Iran occurred at the most inopportune moment for markets, although you may well wonder: Is there ever an opportune time for war?

Until now, financial markets have taken the ongoing Ukraine war in stride, as well as the Gaza conflict. But strategists are much less sanguine on the war against Iran because of the impact of higher oil prices on inflation and economic growth, should the conflict last longer than expected.

It has also happened at a time when markets seemed most wobbly. First, there is the existential threat of artificial intelligence (AI) against software stocks. Then the upheaval in certain quarters of private credit. More recently, last week, a dismal US jobs report.