The US Iraq conflict is still escalating! The interpretation of the institutions that bear the impact in the financial market

category:Finance
 The US Iraq conflict is still escalating! The interpretation of the institutions that bear the impact in the financial market


The sudden aggravation of geopolitical conflict is expected to further affect the financial markets such as crude oil, gold and stock market, which makes investors nervous again.

Tensions between the US and Iran escalated sharply over the weekend after the US killed the Iranian Commander

Over the weekend, the conflict between the United States and Iran escalated dramatically.

After Sulaimani was bombed and killed, Iran reacted strongly, with the supreme leader of Iran Khamenei, President Rouhani and foreign minister Zarif all giving strong warnings to the United States. Khamenei said it would be severe retaliation waiting for the United States.

Then, the U.S. Embassy in Iraq and the Iraqi Air Force base were quickly attacked by rockets.

On the evening of January 4 local time in Baghdad, Iraqi security authorities issued a statement saying that several areas in Iraq were attacked by rockets and mortars, including near the U.S. Embassy in Baghdad in the green zone and the Ballard Air Force Base in the north of Baghdad, where U.S. troops are stationed, according to the global network.

Later, it was reported that there was a terrorist attack on US bases in Kenya.

According to the global network, sources and the Somali extremist group Al Shabab said that Al Shabab attacked a military base in Lamu, a coastal area of Kenya used by U.S. and Kenyan military personnel. Al Shabab is an extremist organization associated with Al Qaeda. In recent years, it has launched many terrorist attacks in Somalia and its neighboring countries.

In the meantime, the United States is not weak. U.S. President trump has warned Iran that if it attacks U.S. personnel or facilities, the U.S. will carry out a swift attack on 52 Iranian targets, according to Xinhua.

Trump tweeted on social media that the U.S. rejects any threat. If Iran attacks any U.S. personnel or facilities, the U.S. will carry out a quick and fierce attack on 52 Iranian targets, some of which are of great significance to Iran.

According to U.S. media reports, the U.S. side chose 52 targets because they represent 52 U.S. embassy personnel detained by Iran during the 1979 Tehran hostage crisis.

In response, general abdullahim Mousavi, commander-in-chief of the Iranian army, responded that Washington lacked the courage to launch a conflict. I wonder if they have the courage to initiate [a conflict], he said

Many countries call on all parties to exercise restraint and remind Chinese citizens to pay attention to security

The US side briefed its position on the current situation in the Middle East.

Yang said China is highly concerned about the current situation in the Middle East. China has always advocated resolving differences through dialogue and consultation and opposes the use of force in international relations. It is hoped that all parties concerned, especially the United States, will exercise restraint and return to the track of seeking solutions through dialogue as soon as possible, so as to reduce tensions.

Geng Shuang, a spokesman for Chinas foreign ministry, said at a regular press conference Wednesday that China has always opposed the use of force in international relations and urged all parties concerned, especially the United States, to maintain calm and restraint and avoid further escalation of tensions.

French President Marcon spoke by telephone with Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan on Wednesday to discuss the situation in the Middle East, the French presidential palace said in a press release. President of France and Russia agreed to maintain close communication in the next few days and called on all parties to exercise restraint.

Dominic Labu, the British foreign minister, said that the armed forces led by Sulaimani posed an offensive threat. After his death, Britain called on all parties to reduce the conflict, further conflict is not in our interest..

The announcement said that recently, after the death of Qasim Sulaimani, commander of the Islamic Revolutionary Guards Holy City Brigade, in Baghdad airport, Iraq, cities across the United States strengthened security measures and the capital, Washington, was on alert.

The Chinese Embassy in the United States suggests and reminds Chinese citizens in the United States to pay close attention to the local security situation, increase vigilance, pay attention to security precautions, and carefully consider going to public places. In case of danger or emergency, please call 911 in time. For consular assistance, please call the 24-hour global emergency call center for consular protection and services of the Ministry of Foreign Affairs (01186-10-1230801186-10-59913991), or contact the Chinese Embassy and consulate in the United States.

In fact, after the death of Iranian commander Kasim Sulaimani by the United States, the global financial market has suffered a significant shock. The situation is further upgraded on Saturday and Sunday, which is bound to have a further huge impact on the global financial market.

Tensions in the region also led to a sharp rise in gold prices as a safe haven asset, with Comex gold futures up 1.77% on Friday, the biggest one-day increase in recent times.

As tensions escalated over the weekend, crude oil and gold prices are likely to continue to rise sharply after the opening of major financial markets.

However, while the stock market was hit, most oil stocks rose.

Royal Dutch Shell Oil A shares listed in the US rose 1.86% on Friday.

BP jumped 1.81%.

Military stocks were also stimulated. Lockheed Martin, the worlds largest defense industry contractor, jumped 3.60% Friday.

It is expected that after the subsequent opening of the market, the above sectors of us and a shares are still likely to be higher.

For this black swan incident in the Middle East, various organizations have also interpreted it.

Guotai Junans research view released today holds that trump will continue his tough policy towards Iran in the Middle East under the dual pressure of election and impeachment, while the attack on Sulaimani will further arouse Irans hostility towards the United States.

Guotai Junan believes that whether the conflict continues to escalate or not depends more on Irans response strategies, which can be observed from the following aspects: supporting regional anti American forces, expanding regional influence, developing nuclear forces and ballistic missiles, and strengthening military forces in the Gulf. At the same time, Irans economy under US sanctions has been declining in recent years, lacking a strong economic foundation against the US.

In terms of the impact on the capital market, Guotai Junan believes that the impact of the continued escalation of the US Iraq conflict on the supply side of crude oil is an important factor to determine whether the oil price will continue to rise in the short term, but the high oil price is not in line with the overall consideration of the interests of the United States in the Middle East. It is estimated that the price center of Brent crude oil in the whole year will fall between 65-70 USD / barrel, which is higher than that in 2019. The trend of crude oil price in the whole year is high at both ends and low in the middle.

After Sulaimani was bombed and killed, Bohai Securities first published a research opinion that it should pay close attention to the follow-up reactions of Iran and the Middle East, and be cautious about the long-term impact of the incident.

Bohai Securities pointed out that in history, the direct triggers of the three oil crises in 1973, 1978 and 1990 were all related to the escalation of military conflicts among major countries in the Middle East. If the event is long-term, it may have a significant impact on oil prices and inflation. As an important industry and energy material, the rise of oil price will affect the cost of various industries, significantly raise inflation, and affect the path and space of monetary policy of various countries.

In addition, if the event is long-term, it may have a significant impact on the US dollar and gold prices. On the one hand, from the perspective of risk aversion, the US dollar index will be pulled down and the gold price center will be raised; on the other hand, from the inflation path, the US and global inflation rates will be raised, the US and global real interest rates will be lowered, and the gold price will be further boosted.

In terms of the impact on the bond market, Bohai Securities believes that it needs to be considered by circumstances. If the subsequent events are more limited to the level of market risk aversion, it is considered that the positive component of the bond market is greater; if the subsequent events continue to develop into substantial inflation pressure caused by the continuous rise of oil price, it is considered that the negative component of the bond market is greater.

In terms of the impact on the European economy and market, Bohai Securities believes that in addition to energy, inflation and risk aversion, the current situation in the Middle East has another transmission channel to the European economy and market, which is refugees. The refugee crisis in the Middle East is an important driver of brexit, split public opinion in Europe and political change since 2016. Therefore, no matter how Europe responds this time, the escalation of tension in the Middle East will be a major blow to the European economy and market confidence.

On the whole, Bohai Securities believes that the current market response mainly shows the concern about the long-term event. The trend of oil price is the key index to influence the transmission. The impact of the event on the market itself, in the current environment, may have had a non short-term impact on the gold price center. The impact of the event on the bond market is double-sided, and the oil price trend needs to be taken as a leading indicator of close attention. The incident was not conducive to the global economic recovery and further hit European and American markets, especially European markets.

Source: responsible editor of Securities Times: Li Zhaoyuan