Investors Reaction to Geopolitical Tensions

Some investors are of the opinion that due to the running tensions between the US and Iran, it's better to wait for a while before stepping into the market. It is always better to operate in an area where there is clarity. The market condition has turned volatile and the safest thing now is not to do anything in this volatile market

Experts are advising the investors that one cannot predict anything permanently by watching a short- term movement in the market. We need to see and analyse the incoming data to be convinced about this situation. This havoc has affected the investors in serious mode. Many of the investors went to debt and the growth in the market has become slow. So, we need to be mindful of what will happen if growth remains weak or a sudden increase in interest rates would occur to worsen the situation.

If we look at the market, the market reaction has been muted so far. The impact of geopolitical tensions tends to be short-lived. The immediate market reaction to the US airstrike has raised short and medium-term issues that have not been sufficiently internalized by traders and investors. As long as the conflict between the two countries persists, market participants will most likely be tempted to quickly brush-off their initial risk.

As a result of this continuing situation, equities fell, oil prices soared and yields on US and German bonds declined. Investors are facing difficulties in balancing the favourable short- term market conditions with mounting longer-term uncertainties.

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