The current war between Israel and Palestine began on October 7, 2023, when Hamas launched a surprise attack on Israel, firing over 5,000 rockets into the country. Israel responded with air strikes on Gaza, and the two sides have been engaged in heavy fighting ever since.
The war has caused widespread death and destruction on both sides. As of October 10, 2023, at least 22 Israelis and 45 Palestinians have been killed. The United Nations estimates that over 100,000 Palestinians have been displaced from their homes in Gaza.
The war has also had a devastating impact on the civilian population. Hospitals in Gaza are struggling to cope with the influx of wounded patients, and there is a shortage of food and water in the Strip.
The international community has called for a ceasefire, but so far, there is no sign of an end to the fighting.
Why is the war happening?
The roots of the Israeli-Palestinian conflict go back to the creation of the State of Israel in 1948. Palestinians were displaced from their homes in large numbers during the war, and many have been living in refugee camps ever since.
Palestinians are seeking to establish their own independent state in the West Bank, Gaza Strip, and East Jerusalem. Israel has occupied these territories since the 1967 Six-Day War, and has refused to withdraw without a negotiated settlement.
The current war is the latest in a series of conflicts between Israelis and Palestinians. The two sides have been unable to reach a lasting peace agreement, and the conflict remains a major source of tension and instability in the region.
What are the international reactions so far?
- The Czech government has condemned Hamas for launching “terrorist attacks” on Prague’s traditional ally Israel.
- The European Union’s foreign chief, Josep Borrell, expressed solidarity with Israel.
- The French foreign ministry said France condemned the “terrorist attacks under way against Israel and its population” and that France expressed its full solidarity with Israel.
- The UK “unequivocally condemns” a surprise attack by Palestinian group Hamas on Israel on Saturday, Foreign Secretary James Cleverly said.
- Egypt warned of “grave consequences” from an escalation in a statement from the foreign ministry carried by the state news agency on Saturday. It called for “exercising maximum restraint and avoiding exposing civilians to further danger”.
- Lebanese group Hezbollah issued a statement on Saturday saying it was closely following the situation in Gaza and was in “direct contact with the leadership of the Palestinian resistance”.
What it means for the financial markets ?
History doesn’t repeat itself, but it often rhymes. The overall impact of the war on financial markets has been negative. The conflict has led to increased volatility and uncertainty, and has caused investors to seek out safe-haven assets.
One of the most immediate effects of the war has been a rise in oil prices . Oil is a key commodity for the global economy, and any disruption to supply can have a major impact on prices. The global economy isn’t about to suffer another Arab oil embargo that would triple the price of a barrel of crude. Yet, it would be a mistake to downplay the chances that the world faces higher-for-longer oil prices. The situation is fluid, and for the oil market, everything depends about how Israel responds to Hamas.
Gold’s safe haven appeal might lead investors to gold and other precious metals in terms of heightened geopolitical tensions and war. Not only are other asset prices affected immediately in the event of war or even the threat of it, but wars also mean excessive money printing and accelerated government spending. It’s no surprise, then, if investors turn their attention to gold and other precious metals.
The US dollar is often seen as a safe-haven asset, and this has often times led to an increase in demand for the dollar. This has caused the dollar to strengthen against other currencies.
For the 2003 Iraq War, the S&P 500 fell over 7 trading days but only by 5.3%, before taking 16 days to recover. On the event of 9/11, Although an act of terrorism and not a war it was clearly a tragic and seismic event. The impact on the S&P 500 was the harshest, with it falling by over 11% within 6 trading days.
These facts and figures are largely telling us what we already know – that markets react badly to negative geo-political events. However, after an initial inconsistency and a period where investors try to digest events, markets tend to recover relatively quickly. Of course, we have to emphasise on what I said earlier that history does not necessarily repeat itself. But it’s best we are aware of discrepancies in the coming days.
What can be done to end the war?
The only way to end the war is through a negotiated ceasefire. Both sides need to be willing to compromise and to recognize the legitimacy of the other side’s aspirations. The international community can play a role by supporting peace efforts and by putting pressure on both sides to end the violence. The war in Israel and Palestine is a tragedy for both sides. Our condolences and prayers are with all families suffering during this difficult time.