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  5. MISC: Isreal/Hamas war. [Miscellaneous]
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Q: Isreal/Hamas war.What is the impact on the US & Canadianstock markets,canadian banks,oil stocks and REIT?Will the war spread to involve other Middle East countries?,If it does,then what is the impact on the the US & Canadian stock markets,Can banks,oil stocks & Reit? Is it prudent to reduce stocks? Txs for U usual great services & views
Asked by Peter on October 17, 2023
5i Research Answer:

Uncertainty is never good for stocks. While (unfortunately) the dispute is certainly not 'new', there is a higher risk this time we think of an escalation. An escalation would not be good for any sector, other than perhaps the defense sector and oil. Energy is the biggest risk, considering the location of the conflict and the possibility that Iran gets more involved. Energy stocks could do very well if oil approached $100. With equities there are always uncertainties. So far, the stock market has taken things in stride. To 'go to cash' means one has to be able to predict both the timing, severity and resolution of the conflict, and we would not suggest that. Simply, we would keep cash at a 'sleep at night' level. It is a sad fact that markets have actually often risen in times of war. Not that it is 'good' of course, but more likely that it is so common that investors just consider it another form of risk with equities in general.