Vivien Lou Chen is a Markets Reporter for MarketWatch. You can follow her on Twitter @vivienlouchen.
The unfolding conflict between Israel and Hamas has financial markets weighing how a war in the Middle East may impact the Federal Reserve’s next policy steps.
“It’s too early to say whether the knee-jerk reactions seen in the market on Monday are going to be maintained or accelerate. It depends on how quickly and how far this conflict expands,” said Randal Stephenson, head of investment banking at FE International, a mergers-and-acquisitions advisory firm headquartered in New York.
Gold rallied on its safe-haven appeal and oil prices climbed by more than 4%. U.S. stocks DJIA SPX COMP flipped to positive, after being lower throughout the New York morning, as investors focused on remarks from Dallas Fed President Lorie Logan that suggested there may be less need to raise the fed funds rate.
“If this conflict remains contained between Israel and Hamas, that probably won’t have larger ramifications on financial markets in the longer term,” Stephenson said via phone on Monday. However, “if this conflict spreads to other regions, that could cause a rise in oil prices and that would be inflationary and would affect what the Fed is trying to do.”
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