The war in the Middle East is once again influencing investors this Friday. Israel has launched a strong offensive against nuclear and military targets in Iran early this morning, impacting the market with oil price increases exceeding 5% at the European opening, reaching even higher levels overnight with spikes of 10%, the highest price since January. It is worth noting that Iran is the eighth largest oil producer in the world.
The situation in the region continues to escalate. Iran, in response, launched over a hundred drones against Israel. Meanwhile, U.S. Secretary of State Marco Rubio denied the involvement of the Donald Trump administration in the attacks carried out by the Israeli Army early Friday against alleged nuclear targets in Iran, stating that it was a "unilateral action" by their ally in the Middle East. However, he acknowledged that the Israeli government informed them that this action was "necessary" for their self-defense.
The Brent, the European benchmark, has seen its price rise by more than 5% above $70 per barrel. This directly impacts airlines, major consumers of oil. In Spain, IAG, the Hispano-British holding company, saw drops exceeding 7% in early trading, down to ¤3.66 per share. This situation extends to the rest of the sector. German airline Lufthansa was down 6% at the start of Friday; easyJet and Air France-KLM both dropped 5%, while other tour operators like Carnival suffered similar declines around 5%. Many airlines have already canceled flights in the region.
Among the major European indices, the Ibex 35 started this Friday's session with a 1.2% drop, falling below 14,000 points, with losses exceeding 1.8% at times. These losses are also seen across other European markets, such as the DAX in Frankfurt, the EuroStoxx 50, and the CAC 40 in Paris. The big winners in the current situation are once again defense companies and arms manufacturers like Italian Leonardo, Bae Systems, or Rheinmetall, all seeing increases of over 3%.
Money, always cautious, seeks refuge in gold, which rises by 1%, reaching $3,430 per ounce. And the world remains the same... as U.S. President Donald Trump, far from toning down his rhetoric, once again called Federal Reserve Chairman Jerome Powell 'idiot' last night for not complying with his wishes to lower interest rates. The tension caused by Israel in the markets has overshadowed these statements, and investor purchases are timidly entering the bond market, with the 10-year U.S. debt yield dropping to 4.34%.