This topic discusses the ongoing tensions between Israel and Iran and its implications on the markets.
S&P 500 futures down 1.6% after Israel launched a series of airstrikes in Iran, killing Iran’s head of Islamic Revolutionary Guard Corps
- Israel launched a series of airstrikes in Iran, leading to the death of commander-in-chief of Iran’s Islamic Revolutionary Guard Corps, Hossein Salami and two top Iran’s nuclear scientists, Fereydoun Abbasi-Davani and Mohammad Mehdi Tehranchi.
- Mohammadhossein Bagheri, chief of the Iranian Armed Forces was also killed in the attacks.
- Iran’s supreme leader, Ali Khamenei vowed to avenge the attacks while Israel’s prime minister Benjamin Netanyahu said the operation will continue for days.
- S&P 500 futures shed 1.6%, Nasdaq 100 lost 1.8%, Dow Jones industrial average dropped 1.4% while oil prices rose more than 9% following the news of the attack.
- US said it didn’t participate in the strike but President Trump was briefed beforehand and his Truth Social post suggests he endorsed it.
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Israel now says Iran has launched 100 drones at it in retaliation to the attacks. This is lower than the 170 drones that it launched in April 2024 attack. But they could be trying to create distractions as they plan a major attack. However, based on expert commentary, I believe the possibility of an all-out war is low (probably less than 30%). This is informed by;
- Disruption of nuclear progress: International Atomic Energy Agency (IAEA) recently published a report that said Iran now holds 408.6kg of uranium enriched up to 60 percent, a 50% jump from February. However, it’s estimated that it would take Iran 6 to 24 months to weaponize it (GP3 o23). The killing of the two top scientists and the attacks on nuclear sites derail their progress.
- US support: President Trump recently said that they would protect Israel if Iran retaliates. According to experts, unlike Israel, US has unique capabilities to destroy Tehran underground nuclear capabilities. Totally losing uranium enrichment facilities presents an existential threat to Iran. Therefore, Iran may avoid retaliating in a way that drags US into the conflict.
- Its proxies such as Hamas and Hezbollah are now weakened. In my opinion, Iran had better chance of standing up against Israel last year than now since its proxies were still in a good position to offer support.
Additional expert commentaries:
Futures rose over 1% following reports that Iran is seeking resumption of negotiations
- Iran has signaled through intermediaries that it is open to restarting negotiations as long as U.S doesn’t join the war, the Wall Street Journal reported citing Middle Eastern and European officials.
- They also send messages to Israel saying the want the war contained.
- So far Israel has shown little indications of ending the conflict, with its military saying it has prepared at least two weeks of strikes.
- S&P 500 futures rose 1.1%, Nasdaq Composite gained 1.5% while WTI Crude Oil futures shed 3.8% following the report.
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President Trump said “everyone should immediately evacuate Tehran”, signaling a ceasefire may not be in the offing
Trump threatens Iran in a series of Truth Social posts, asking the supreme leader to surrender unconditionally
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S&P 500 futures and Nasdaq Composite gained 0.9% as Iran’s response against US attacks were restrained and Trump announced ceasefire deal
- Iran’s response against US attacks over the weekend were restrained as its missile attacks against US military base in Qatar were intercepted and no casualties were reported.
- Trump also announced in Truth Social that Iran and Israel had agreed to a ceasefire.
- S&P 500 futures and Nasdaq Composite gained 0.9% as a result.
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Trump said U.S. is prepared to strike Iran if a deal over nuclear program is not reached in the next 10 days
- Trump announced yesterday that "BAD THINGS WILL HAPPEN’ to Iran if it doesn’t make a deal with the US over its nuclear program (first video).
- Meanwhile U.S. military buildup in the region is said to be the largest since the Iraq war in 2003.
- Some sources already reported that U.S. is prepared to strike Iran as early as this weekend but Trump is yet to sign off (second video).
- Some experts believe Trump may not be interested in regime change (min 3:27 and min 4:30 of second video).
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Here are two more videos.
The first and more important one focuses on the massive military buildup of U.S forces in Europe that could be used for an attack on Iran.
The second gives a rough idea (no idea how credible) how a war between the U.S and Iran could look like. (Including risks involved)
Assessment
Overall without more research it is hard to say how likely an U.S. attack is but I could several factors why they could strike including
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Irans weakened position after the loss of its proxies Hamas and Hisbollah in Lebanon
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Irans weakened position after Israeli attacks on Iran with the loss of many air defense systems
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Strong previous protests in Iran
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Emboldened Trump as previous attacks on Irans and Venezuela went well
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Strong pro-Israel stance of Trump and Jewish family members like Jared Kushner.
That means if Iran does not accede to some key U.S demand they might seriously consider a strike as they could see it as a opportune moment to “resolve” a long standing problem in the Middle East.
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