Rs 1 lakh gold, $78 oil, 1,300 point Sensex crash: Israel's Friday the 13th bombshell
Friday the 13th, often seen as an unlucky day in Western culture, lived up to its reputation as the Sensex plunged over 1,300 points during the morning session, amid a broad-based sell-off on Dalal Street.
Synopsis Israel's missile strike on Iran sent shockwaves through global markets, triggering a sharp decline in stock indices and a surge in oil prices. The attack, targeting Iran's nuclear facilities, escalated Middle East tensions, prompting investors to seek safe-haven assets like gold and government bonds. Concerns over supply disruptions and potential retaliation from Iran further fueled market volatility, impacting various sectors. Just when Indian housewives were sighing in relief over gold slipping below Rs 1 lakh, economists were counting on a low crude regime, and stock investors were raking in profits, Israel's pre-dawn missile strike on Iran overturned their fleeting moments of optimism.
ADVERTISEMENT Friday the 13th, considered ominous in western culture, lived up to its reputation as Sensex fell over 1,300 points in morning session while Nifty fell below 24,500-mark amid widespread sell-off on Dalal Street. The strike escalates Middle East tensions in a key oil-producing region, exacerbating existing pressure on global markets from President Trump's trade policy overhauls.
Israel said it targeted Iran's nuclear facilities, ballistic missile factories and military commanders on Friday at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon. Israeli media and witnesses reported explosions at multiple sites and confirmed the killing of Revolutionary Guards Chief Salami in the strike. Israel declared a state of emergency anticipating Iranian retaliation through missile and drone strikes.
Also Read | Why stock market is falling today? 4 key factors behind Sensex's 1,100-point crash, Nifty below 24,650Crude oil prices jumped more than 13% as a result amid worries about disruptions in oil supplies. The benchmark Brent crude contract hit $78.50 per barrel, its highest since January 27. Friday's gains were the largest intraday moves for both contracts since 2022 after Russia invaded Ukraine, causing energy prices to spike."This has elevated geopolitical uncertainty significantly and requires the oil market to price in a larger risk premium for any potential supply disruptions," ING analysts led by Warren Patterson said in a note.
ADVERTISEMENT JP Morgan analysts went on to warn that the oil price could spike to as much as $120 in the worst case scenario if supply impact extends beyond the reduction in Iranian exports and price reaction is exponential rather than linear. "An attack on Iran could spike oil prices to $120, driving US CPI to 5%. The closure of Hormuz is a low-risk event as Iran would be damaging its own position, both economically and politically, by irritating its main customer," the bank said.Peter McGuire, CEO, Australia, Trading.com, highlighted the critical nature of the Strait of Hormuz: "The Strait of Hormuz is such an integral part as far as it is a true choke point when it comes to energy transportation and the impact that that can have across the whole Persian Gulf. Every hour that rolls forward is another new lens that you have got to look at the markets with."
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Gold futures on MCX rose above the psychologically important Rs 1 lakh per 10 gram mark for the first time ever, on a weak rupee and tracking gains in global bullion markets.Analysts say any further escalation is likely to drive gold prices higher amid demand for safe haven assets.
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Global markets plunged in early Asian trading as investors fled to safe havens. U.S. stock futures dropped by more than 1%, while the dollar, yen, and Swiss franc strengthened in tandem with gold and Treasuries.Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, warned of broader economic consequences: "Sometimes bad news comes in a flood. Close on the heels of the Ahmedabad air tragedy has come the news of Israel's attack on Iran. The economic consequences of this Israeli strike can be profound if the attack and counter attack by Iran lingers long. Israel has declared that the operation will last several days."
ADVERTISEMENT "The impact on the market will depend on how long the conflict lingers. In the near-term the market will be in a risk-off mode. Sectors that use oil derivatives as inputs like aviation, paints, adhesives and tyres will be hit hard. Oil producers like ONGC and Oil India will remain resilient. Nifty is likely to get strong support at 24500 level," Vijayakumar added.Indian government bond yields hit a five-week high on Friday as higher oil prices and caution before the weekly debt auction dampened sentiment. India is a major importer of crude oil and higher prices could affect the benign inflation outlook.
The uncertainty surrounding US-China trade negotiations, compounded by President Donald Trump's threat to impose unilateral tariffs within two weeks, has further pushed investors toward traditional safe-haven assets.
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