the US and British attacks on Houthi and the impact of stock market








the US and British attacks on Houthi and the impact of stock market

 The US and UK launched airstrikes on more than a dozen sites used by the Iranian-backed Houthis in Yemen. This was a significant military response to the Houthis’ persistent campaign of drone and missile attacks on commercial ships in the Red Sea. The Houthis, backed by Iran, run most of the west of Yemen and control its Red Sea coastline. The strikes have raised fears of a broader escalation of the conflict in the region.


The attacks led to an increase in oil prices. Brent jumped on fears there would be more disruption to shipping, and that the conflict could expand into a broader regional conflagration. Global benchmark Brent was trading around 4% higher. The rise in oil prices was driven by the market’s perception that this is an escalation of the conflict.



The impact of rising oil prices on the stock market

The impact of rising oil prices on the stock market is complex. An increase in oil prices usually lowers the expected rate of economic growth and increases inflation expectations over shorter horizons. Decreasing economic growth prospects, in turn, lower companies’ earnings expectations, resulting in a dampening effect on stock prices. However, high oil prices can drive job creation and investment as it becomes economically viable for oil companies to exploit higher-cost shale oil deposits. Conversely, high oil prices can lead to inflationary pressures and economic slowdowns, impacting stock market performance. The impact can vary across different sectors, with some (like transportation and manufacturing) being negatively affected due to increased operational costs, while others (like the energy sector) may see increased investments.


Please note that these are general trends and the actual impact can vary based on a multitude of factors. It’s also important to remember that correlation does not imply causation, and many other factors can influence stock market performance.

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