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Should Investors Be Worried About Israel/Palestine Conflict?

October 25, 2023

There’s no denying we live in a world where tragic headlines seem to occur daily. From floods, earthquakes, and devastating wildfires to inflation, political discord, and world hunger, the bad news can be hard to stomach some days. The recent news of the traumatic conflict in the Middle East triggers feelings of both sorrow and fear, including fear of how this will impact financial markets.

The U.S. and global economies were already rattled by inflation and rising interest rates. With the news of the surprise attack by Palestine’s Hamas group on Israel (and Israel’s subsequent declaration of war), there are certainly worries about how this could impact financial markets. The fallout of this war will take time to be fully understood, but if the conflict spreads to the rest of the Middle East, there could be far-reaching concerns. Iran, specifically, supports Hamas and is a significant oil producer; if they become embroiled in this conflict, it will likely impact the price and availability of crude oil.

Just after the Hamas attack, crude prices jumped by about 4%, but that’s a typical “fear premium” market reaction based broadly on the speculation of higher risk. It wasn’t a huge increase, and prices readjusted over the following days. While none of us knows for certain how things will play out, investors are understandably watching closely to see the impact of these events on an already volatile market. And the potential for far-reaching and/or long-term effects can be especially worrisome for those who are following this crisis closely. Please know that we are continuously evaluating what it may mean for world and U.S. markets as well as your personal investments.

If you’re looking for more information to better understand the roots of this conflict, Financial Times put together a list of recommended books to help you understand the Israeli-Palestinian conflict. Look up these titles to read more about them and find one that is of interest to you:

  • Enemies and Neighbours: Arabs and Jews in Palestine and Israel 1917-2017by Ian Black (2017)
  • Eighteen Days in October: The Yom Kippur War and How it Created the Modern Middle East by Uri Kaufman (2023)
  • Bibi: The Turbulent Life and Times of Benjamin Netanyahu by Anshel Pfeffer (2018)
  • A Day in the Life of Abed Salama: A Palestine Story by Nathan Thrall (2023)
  • Footnotes in Gaza by Joe Sacco (2009)
  • Hamas: The Islamic Resistance Movement by Beverley Milton-Edwards and Stephen Farrell (2010)
  • The Iron Cage: The Story of the Palestinian Struggle for Statehood by Rashid Khalidi (2007)
  • A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East by David Fromkin (1989)
  • A Line in the Sand: Britain, France and the Struggle That Shaped the Middle East by James Barr (2011)
  • Israel: A History by Anita Shapira (2012)

Finally, a reminder: market volatility is expected, and fluctuations are a natural part of normal market cycles (as are recoveries). It’s hard to say how long this heartbreaking crisis may last nor what the financial impacts may be as a result. But, we can say that the financial plans we have in place are built to help withstand volatility. In the meantime, if you’d like to discuss any of these current events in more detail, please reach out. We’re here to help.