We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 ETFs Likely to Benefit From Iran's First Direct Attack on Israel
Read MoreHide Full Article
Iran launched a barrage of explosive drones and missiles on Israel late on Saturday in its first direct attack on Israeli soil, prompting concerns of a significant escalation. Sirens blared in Israel, as reported by Reuters, and distant booming sounds were heard, likely from the interception of the drones.
Israel said it identified 300 “threats of various types” and eliminated “99%” of those bound for Israeli soil, according to an update from an Israel Defense Forces spokesperson, as quoted on CNBC. Iran’s Revolutionary Guards seized a cargo ship in the Strait of Hormuz on Saturday, saying the vessel, associated with Israel, prompted heightened alert levels due to the possibility of a direct Iranian attack,
This could escalate a decade-old standoff between the two regional adversaries. Notably, the Gaza war between Israel and Hamas, now entering its seventh month, has heightened tensions in the region, extending to conflicts with Lebanon and Syria. Additionally, long-range attacks targeting Israeli interests have originated from Yemen and Iraq.
Market Impact
Investors are likely to take this clash seriously and rush toward fear-induced selling. The sudden rise of chaos in the market brightened the appeal for safe-haven assets. Volatility ETFs, which track the implied volatility of the market, also surged thanks to the massacre in the stock market. iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) has added about 4.2% last week, rose 8.8% on Friday and advanced about 1% after hours on Apr 12.
Below, we highlight a few of the biggest gainers from the latest flare-up in the geopolitical crisis. Also, these ETFs may continue to shine should tensions persist in the global economy in the near term.
Oil
The Brent crude ETF United States Brent Oil ETF (BNO - Free Report) should gain ahead as the geopolitical crisis has heightened in the Middle East. So far this year, the Middle East has witnessed heightened tension with indirect Iranian involvement, raising concerns about a potential impact on oil supply.
Now, the direct Iranian involvement in the Israel-Hamas war could trigger a region-wide conflict with significant implications for oil supply. In a separate development, Ukraine also conducted a drone strike on one of Russia's largest oil refineries in the Tatarstan region recently. With these regions being oil-rich, such attacks are detrimental to global oil supplies.
Gold
Gold is often viewed as a hedge against market risk. The metal has seen some strength lately thanks to this market turmoil. Gold bullion ETF SPDR Gold Trust (GLD - Free Report) has gained 0.4% in the past five days. It added 0.14% after hours on Apr 12.
Defense
The ongoing war in the Middle East and the East Europe are causing geopolitical tensions of one form or another. Yemen’s Houthis have been attacking ships in the Red Sea. China’s defense budget for 2023 grew by 7.2%, marking a straight eighth consecutive year increase.
India is also planning to boost defense spending by 13% with billions to be invested for new weapons. U.S. defense spending makes up more than 10% of all federal spending and nearly half of discretionary spending. All these factors make the case solid for defense ETF investing. iShares U.S. Aerospace & Defense ETF (ITA - Free Report) is a good pick here (read: 4 Industry ETFs to Play as US Manufacturing Grows in 1.5 Years).
Shipping
In the past few months, attacks on vessels in the Red Sea area reduced traffic through the Suez Canal, the shortest maritime route between Asia and Europe, through which about 15% of global maritime trade volume normally passes. Hence, shipping companies have been the best-performing stocks lately, as the re-routing of vessels following attacks in the Red Sea has driven up freight rates. The latest Iranian attack has made the case even better for the shipping industry as it is likely to boost Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) .
Long-Term U.S. Treasury
U.S. 10-year benchmark treasury yield slumped to 4.50% on Apr 12, 2024, down from 4.56% recorded on Apr 11, despite talks of higher-for-longer rates due to a rise in volatility in the markets. Notably, U.S. Treasuries are also perceived as a risk-free asset class, which is why iShares Barclays 20 Year Treasury Bond Fund (TLT - Free Report) and iShares Barclays 7-10 Year Treasury Bond Fund (IEF - Free Report) added about 0.5% and 0.4% on Apr 12, 2024.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 ETFs Likely to Benefit From Iran's First Direct Attack on Israel
Iran launched a barrage of explosive drones and missiles on Israel late on Saturday in its first direct attack on Israeli soil, prompting concerns of a significant escalation. Sirens blared in Israel, as reported by Reuters, and distant booming sounds were heard, likely from the interception of the drones.
Israel said it identified 300 “threats of various types” and eliminated “99%” of those bound for Israeli soil, according to an update from an Israel Defense Forces spokesperson, as quoted on CNBC. Iran’s Revolutionary Guards seized a cargo ship in the Strait of Hormuz on Saturday, saying the vessel, associated with Israel, prompted heightened alert levels due to the possibility of a direct Iranian attack,
This could escalate a decade-old standoff between the two regional adversaries. Notably, the Gaza war between Israel and Hamas, now entering its seventh month, has heightened tensions in the region, extending to conflicts with Lebanon and Syria. Additionally, long-range attacks targeting Israeli interests have originated from Yemen and Iraq.
Market Impact
Investors are likely to take this clash seriously and rush toward fear-induced selling. The sudden rise of chaos in the market brightened the appeal for safe-haven assets. Volatility ETFs, which track the implied volatility of the market, also surged thanks to the massacre in the stock market. iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) has added about 4.2% last week, rose 8.8% on Friday and advanced about 1% after hours on Apr 12.
Below, we highlight a few of the biggest gainers from the latest flare-up in the geopolitical crisis. Also, these ETFs may continue to shine should tensions persist in the global economy in the near term.
Oil
The Brent crude ETF United States Brent Oil ETF (BNO - Free Report) should gain ahead as the geopolitical crisis has heightened in the Middle East. So far this year, the Middle East has witnessed heightened tension with indirect Iranian involvement, raising concerns about a potential impact on oil supply.
Now, the direct Iranian involvement in the Israel-Hamas war could trigger a region-wide conflict with significant implications for oil supply. In a separate development, Ukraine also conducted a drone strike on one of Russia's largest oil refineries in the Tatarstan region recently. With these regions being oil-rich, such attacks are detrimental to global oil supplies.
Gold
Gold is often viewed as a hedge against market risk. The metal has seen some strength lately thanks to this market turmoil. Gold bullion ETF SPDR Gold Trust (GLD - Free Report) has gained 0.4% in the past five days. It added 0.14% after hours on Apr 12.
Defense
The ongoing war in the Middle East and the East Europe are causing geopolitical tensions of one form or another. Yemen’s Houthis have been attacking ships in the Red Sea. China’s defense budget for 2023 grew by 7.2%, marking a straight eighth consecutive year increase.
India is also planning to boost defense spending by 13% with billions to be invested for new weapons. U.S. defense spending makes up more than 10% of all federal spending and nearly half of discretionary spending. All these factors make the case solid for defense ETF investing. iShares U.S. Aerospace & Defense ETF (ITA - Free Report) is a good pick here (read: 4 Industry ETFs to Play as US Manufacturing Grows in 1.5 Years).
Shipping
In the past few months, attacks on vessels in the Red Sea area reduced traffic through the Suez Canal, the shortest maritime route between Asia and Europe, through which about 15% of global maritime trade volume normally passes. Hence, shipping companies have been the best-performing stocks lately, as the re-routing of vessels following attacks in the Red Sea has driven up freight rates. The latest Iranian attack has made the case even better for the shipping industry as it is likely to boost Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) .
Long-Term U.S. Treasury
U.S. 10-year benchmark treasury yield slumped to 4.50% on Apr 12, 2024, down from 4.56% recorded on Apr 11, despite talks of higher-for-longer rates due to a rise in volatility in the markets. Notably, U.S. Treasuries are also perceived as a risk-free asset class, which is why iShares Barclays 20 Year Treasury Bond Fund (TLT - Free Report) and iShares Barclays 7-10 Year Treasury Bond Fund (IEF - Free Report) added about 0.5% and 0.4% on Apr 12, 2024.