On June 13, Israel carried out its first military strike in Tehran, Iran, hitting an apartment building where civilians were living. This act marks yet another unfortunate attack, this time worsening the already sour political atmosphere between the two countries. It continues to raise regional stability issues. Its effect from the attack was felt in all Asian markets, with investors responding largely to the increased risk aversion sentiment.
The attack resulted in debris from the apartment building cascading onto parked cars below, illustrating the severity of the incident. In the aftermath of the strike, Asian stock markets were largely hit hard as investors fled riskier assets. A lack of clarity about what the geopolitical situation would mean fueled a rush to the exits, sending shares lower throughout the continent.
Oil prices spiked by 13% in the immediate aftermath of the attack. This increase is a clear manifestation of concerns over possible supply interruptions in such an unstable market. The jolt to oil prices worsened the investors’ anxiety. Like everyone else, they are concerned about what would happen if tensions in the Middle East continue to escalate.
Currency markets were rattled, too, by Israel’s escalation. The Japanese yen jumped 0.73% to the USD. At one point during trading it was as high as 142.81. This increase is a strong sign of a flight to safety, with investors flocking to more secure assets in the face of escalating geopolitical risk.
Other Asian currencies faced challenges. The South Korean won fell by 0.9%, and India’s and Malaysia’s currencies were down 0.4%. The Singapore dollar fell by 0.2%. This drop marks the most recent instance in a larger regional trend of currency depreciation.
Market analysts are cautioning that Israel’s current attack will trigger a long-term upheaval in the region. This instability is sure to impact investor sentiment in the days ahead. As tensions keep growing, stakeholders will surely be watching closely for the next steps in Iran and Israel’s escalation.