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The Markets Keep Their Head Following Iran's Retaliation

Daniel Laboe

Tehran launched around 20 ballistic missiles at 2 US bases in Iraq Tuesday evening. This attack was retribution for the US’s assassination of Iran’s top general Qassam Soleimani.

S&P 500 SPY futures initially sold off over 1.6% following the attack but quickly retraced to positive levels. Today the stock market is hitting all-time highs, and oil USO prices are down almost 5%, leaving some retail investors bewildered.

The primary explanation for this market reaction is that the retaliation was not meant as an initiation of war. There were no US casualties in last night’s attack because Iran wasn’t aiming to kill. Iran only wanted to flex its muscles and show that they could kill American’s if they wanted.

In the eyes of the market, this was tit-for-tat and would be the end of this conflict. Following President Trump’s address this morning, the markets pushed even higher touching fresh all-time highs. Trump reassured the markets that there would be no further military strikes on Iran.

Despite the US closing the books on this, Iranian’s Supreme Leader said this was not the end of its retaliation. Whether this is the end of the US-Iran conflict remains to be seen, but for now, the markets have priced in peace.

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