US-Iran conflict to drive the markets – Deutsche Bank

Sandeep Kanihama FXStreet Contributor

Deutsche Bank analysts point out that global markets were soon knocked off their perch on Friday by the news that a US airstrike had killed the Iranian military commander Qassem Soleimani.

Key Quotes

“In response, Iran’s Supreme leader Ayatollah Ali Khamienei said that “severe retaliation” awaited his murderers, raising fears over the potential for further escalation between the two sides. However, US President Trump said later on that “We took action last night to stop a war. We did not take action to start a war.” The remarks that the US wasn’t looking for conflict chimed with those by US Secretary of State Mike Pompeo, who tweeted on Friday that in a conversation with Russian foreign minister Sergei Lavrov, “I emphasized that de-escalation is the United States’ principal goal.” However the stakes were raised again on Saturday as Trump identified 52 Iranian sites the US would hit if Iran retaliates.”

“Meanwhile on Sunday the Iraqi government voted to expel US troops from the country after a near 17 year period of presence there since the toppling of Saddam Hussein in 2003. In response, Trump said that US troops won’t leave without billions in payment for their base there - or if they do leave Trump would apply sanctions. Also the Iranian government said it no longer considers itself bound by the limits on the enrichment of uranium. Most importantly though we’re left waiting to see if we get an aggressive response from Iran with the whole Middle East likely feeling vulnerable. The US State department said on Sunday that there was ‘heightened risk’ of missile attacks near military bases and energy facilities in Saudi Arabia.”

“Meanwhile, Esmail Ghaani, the successor to Soleimani, said in an interview with Iranian state television aired today that “Certainly actions will be taken". He also said that, "We promise to continue down martyr Soleimani's path as firmly as before with help of God, and in return for his martyrdom we aim to get rid of America from the region." So, a nervous time awaits markets. Elsewhere, NATO ambassadors are due to meet today in Brussels to discuss the situation in the Middle East.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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