Will war in Israel impact stocks? Is it 1973 all over again?

Nick Sundich Nick Sundich, October 9, 2023

Will war in Israel impact stocks? So far it hasn’t impacted the ASX significantly, although it has hit the Israel stock market – it fell over 6% on Sunday. But could stocks be impacted if the conflict gets worse?

 

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The conflict in Israel

Over the weekend, Hamas launched a surprise attack on Israel that has killed hundreds of people. Israel in response formally declared war on Hamas and Prime Minister Benjamin Netanyahu predicted a ‘long and difficult war’. The attack is not the first war in recent memory Israel has been a part of, but few have started with neighbouring states launching a surprise attack.

It came nearly 50 years after the Yom Kippur War, which has led to many comparisons with that situation and fears oil prices could skyrocket as they did back then.

For now, the war in Israel isn’t quite like 1973 because it is only Hamas attacking Israel – Arab countries are not attacking Israel in unison. It is not yet clear that Iran has been involved. You also need to consider that the oil market is in a far different situation to 50 years ago – back then, demand is surging but now it is moderating as electric vehicles become a reality. And there already are sanction on Iranian oil that are not having an impact because they are being bypassed.

 

Will war in Israel impact stocks?

For the time being, it is hard to see a significant impact on stocks, barring stocks on the Israeli market. But investors should keep an eye on the situation which could impact stocks if other nations (especially OPEC countries) become formally involved.

 

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