Stocks Fall, Stocks Rise: Middle East Aftermath

In the past few days, we spoke of rising tensions in the middle east, and how the market is responding to risks in a muted sense. Yesterday, we saw futures and equities fall, and a surge in oil and gold. Today, we see the opposite as tensions eased.

President Trump moved to de-escalate tensions in Iran, signalling no military response in the form of a strike following Iranian attacks.

“Iran appears to be standing down,” Trump said in a televised address. Moreover, he maintained that the primary goal is to prevent Iran from obtaining Nuclear weapons. Hours after his address, there were attacks on Baghdad’s “Green Zone” - an area where the US Embassy and diplomatic missions are located. As of now, no casualties have been reported, and there is uncertainty regarding who fired the missiles.

The Pentagon’s official response is that attack on US bases was largely anticipated to cause structural damage and destroy weapons, vehicles, and equipment. It was also a response that was anticipated by the US that allowed it to detect incoming missiles in advances, giving troops plenty of time to take protective measures.

Trump’s response has been rather diplomatic, for the better, in the form of an economic sanction than an airstrike. Even though the specific natures of the economic sanctions have not yet been approved, one can expect them to be damaging to the US.

The sanctions are only going to make things worse for the state of the Iranian economy which is already crippled with existing sanctions since 2015.

On Iran’s end - the goal seems to be to remove all US forces from the middle east.

The Dow added 161.41 points, rising 0.6%, to 28745.09. The S&P 500 rose by 0.5%, to 3253.05.

Tesla Soars

Tesla is now the most valuable US automaker ever. A roaring start to 2020 for the firm saw its stock close at $492.00 on Wednesday.

The stock has risen by over 14% this year, and the market cap of the firm is higher than Ford, General Motors, and even BMW.

On Friday, Tesla announced that it reached its record of meeting 360,000 deliveries in 2019. Despite the massive market cap, there’s a major flaw with Tesla: it is yet to have report an annual profit. This profit is largely dependant on the firm’s performance in international markets, especially China.

The company said Tuesday that it is starting work related to the production of its Model Y compact sport-utility vehicle at Gigafactory Shanghai, Tesla’s first overseas plant.