US-Iran conflict driving the markets – Danske Bank

Danske Bank analysts point out that overnight two US military bases in Iraq were attacked and the Iran Revolutionary Guard was quick to claim responsibility claiming it sent 'tens' of missiles.

Key Quotes

“The latest reports are that a total of 15 missiles were fired with 11 hitting targets - 10 of which hit the Ayn-al-Asad base; an important US facility in Iraq. At the time of writing the size of the damages is unclear and it has not been confirmed whether there are any fatalities from the attacks.”

“US President Trump was quick on Twitter writing 'All is well ', that the assessment of causalities and damage is taking place and that he will be making a statement later today. Iran's foreign minister Zarif described the retaliation measures as self-defence and proportionate in size relative to the US assassination of Iran General Soleimani last week. He emphasised on Twitter that 'We do not seek escalation or war, but will defend ourselves against aggression '.”

“Until this morning markets had been characterised by a 'wait-and-see' mode with respect to the Middle East tensions, the earnings season starting next week and Friday's non-farm payrolls report. The attacks mark a clear escalation and the next big thing to watch out for is the US response, which is likely to be a function of the actual damages done in this morning's attacks. We will therefore keep a close eye out for news flow on the damages.”