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QUOTES-Likely Market Reaction After Iran Attacks Israel

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April 14 (Reuters) – Iran warned Israel and the United States on Sunday of a “much bigger response” if there is any retaliation for its massive drone and missile attack on Israeli territory on Saturday, as Israel said “the campaign is not over yet “.

Iran launched explosive drones and missiles at Israel in retaliation for a suspected Israeli attack on its consulate in Syria on April 1, a first direct attack on Israeli territory that has stoked fears of a wider regional conflict.

Below are analysts’ statements on how the financial markets are likely to react to the developments.

JANE FOLEY, HEAD OF FX STRATEGY, RABOBANK, LONDON

“Outside of gold and oil prices, asset prices have tended to downplay geopolitical news in recent months. This suggests that Israel’s success in fending off Iranian missiles will be taken as a reason to reduce risk aversion at the start of the trading week. .”

“That said, there is a clear increase in geopolitical risks associated with the Middle East, meaning there is plenty of room for volatility in the weeks and months ahead.”

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MICHAEL PURVES, HEAD OF TALBACKEN CAPITAL ADVISORS

“If oil prices continue to rise from here on out, U.S. bond fundamentals will actually get a little worse as inflation stays high for longer and the Fed’s appetite for lowering rates becomes even smaller.”

“A compensating factor is that whatever happens, there will be nervousness and that will prevent bonds from being oversold.”

“We have already priced a lot into the US stock market. On the one hand, there was a risk-on condition going into the year and risks will eventually be bought.

“But why not ultimately make some gains when the news flow is so uncertain?”

SAMY CHAAR, CHIEF ECONOMIST LOMBARD ODIER, GENEVA

“The news flow is about Iran and Israel, so that will be the biggest part (of what people will discuss on Monday), but we are still in an environment where we have not yet digested the US inflation news and what that means for the economy. Fed, and will they be able to cut rates?

“We entered this weekend of geopolitical stress in the wake of the CPI report. It’s a fragile market environment in the short term, but after a fantastic period it’s only fair that there is some vulnerability.”

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TINA FORDHAM, FOUNDER AND GEOPOLITICS STRATEGIST, FORDHAM GLOBAL FORESIGHT, LONDON

“The scale of the Iranian attack on Israel and its launch both from Iran and through proxies is significant. In terms of market reaction, we started to see commodity prices move higher on Friday.

“In the coming days we await Israel’s response – this is the biggest attack on Israel in decades. The risk of regional war has increased significantly. The question becomes: is Israel trying to widen the conflict? card.

“I think oil prices will open higher. Signs that Iran wants to implement a soft blockade of the Strait of Hormuz are also worrying, as this means supply chain disruptions as well as higher oil prices. We have entered a dangerous period ahead of the American elections.”

NICK FERRES, CHIEF INVESTMENT OFFICER, VANTAGE POINT ASSET MANAGEMENT, SINGAPORE

“I’m not going to be an ‘armchair general’ and pretend that I have a head start on how the escalation will proceed. From our position, the most important news for markets last week was the trend acceleration in consumer price inflation and the implications for the path of future short-term interest rates.

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“In addition, there is disappointment with the details of Friday’s JPM and Wells results. In that context, as we have noticed for some time, the risk compensation in equities is downright poor and compared to government bonds. We had already reduced our net long position .” equity exposure prior to this in the past two weeks.”

BRIAN JACOBSEN, CHIEF ECONOMIST, WEALTH MANAGEMENT ANNEX, MILWAUKEE, WISCONSIN

“The key is whether Iran will view this retaliation as a measured and definitive response unless Israel decides to escalate. In 2020, Iran viewed its response to the US assassination of General Soleimani as a measured and just response. Rather than escalating, we’re likely to see a sigh of relief from equities, even as oil prices, gold, the dollar and bonds all carry a risk premium that reflects the conflict.” (Reporting by Tom Westbrook, Alun John, Dhara Ranasinghe and Megan Davies; editing by Susan Fenton)

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