Iran attacks Israel, what next? What will the week bring?

On the night from Saturday to Sunday Iran fired approximately 300 missiles and drones at Israel, which constitutes a serious escalation of the conflict in the Middle East. Tel Aviv admitted that the attack constituted a declaration of war and markets quickly began to assess the potential consequences of last weekend's events. The geopolitical situation has overshadowed last week's (unfavorable) US inflation data, and investors and analysts are wondering - what's next?

Iran attacks Israel

Iran has been announcing a retaliatory attack on Israel for a long time, and the fact that - according to the Israeli military - 99% of Iranian missiles were shot down before they reached their targets meant that the market consequences of last weekend's events turned out to be limited. Both gold and crude oil have suspended their increases, but the main stock indices are still trying to continue the current trend. It seems that the cryptocurrency market reacted the most to the Iranian attack - Bitcoin tested around 62. USD, and other coins followed. Although the situation currently appears to be stable, the risk of further escalation and a possible blockade of the Strait of Hormuz by Tehran remains the main risk factor for the global economy.

Americans may be particularly concerned about the situation in the Middle East. The ongoing conflict concerns not only one of the most important US allies, but also (indirectly) the American economy. Inflation data in March turned out to be particularly weak, and in an environment of growth in services without rental prices, an uncontrolled increase in oil prices could be a serious problem for the Fed. Inflation pressure in the US takes place in the context of not excessively strong demand. The Federal Reserve is therefore concerned that by stimulating demand it may further increase the pressure on prices.

In today's webinar:

• Potential market consequences of an Iranian attack on Israel
• Are we facing a second wave of inflation?
• EBC prepares us for a reduction

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

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