New Israeli Strike – Weekend Risk

Israeli aircraft reportedly struck a location on the outskirts of the Syrian capital, Damascus, late Thursday, according to a security source cited by Reuters. Images circulating on social media depict plumes of smoke rising from the targeted buildings, with Syrian state media confirming that eight army soldiers were injured in the attack.

The recent Israeli airstrike is believed to be another potential targeted assassination operation against Iranian generals or IRGC officers, and it also signals Israel's resolve in the face of Iran's April 13th attack. This attack was reportedly in retaliation for an earlier Israeli strike on Iran's embassy in Damascus.

According to unverified social media reports, the Israeli strike targeted the building of the Syrian State Security branch in the "Najha" area of the Damascus countryside. There is speculation that this attack could be a response to rockets launched from the Syrian side towards the Golan Heights earlier in the day and week.

This latest attack underscores the ongoing tensions between Iran and Israel, which recently escalated but ultimately resulted in limited strikes on each other's territory. Israel had allegedly planned a larger attack, but pressure from Washington reportedly led to a de-escalation to prevent further regional instability.

Potential Rafah Ground Offensive

Israel's potential invasion of the Palestinian region of Rafah has also raised concerns this week. UN officials have emphasised the potential humanitarian tragedy of such an invasion, given the significant number of displaced Palestinians in the area. Israeli Prime Minister Benjamin Netanyahu has reiterated his intention to proceed with the invasion, regardless of Hamas's response to recent truce offers, citing the need to eliminate Hamas presence in Rafah.

UN relief chief Martin Griffiths has warned of an imminent ground offensive. Meanwhile, global pro-Palestine protests and student demonstrations have escalated, and some have turned violent.

Rafah holds strategic importance as Gaza's southernmost city and a refuge for many Palestinians amid Israel's military actions. Israel alleges that Hamas fighters are using civilians as shields in the area.

UN Secretary-General Antonio Guterres has called for intervention to prevent an Israeli assault, emphasising the dire humanitarian situation. The U.S., Israel's primary ally, has expressed opposition to an invasion without a credible plan to protect civilians.

The current conflict stems from escalating tensions between Palestinians and Israelis over land, culminating in recent violence. International efforts, led by the U.S., France, Egypt, and Qatar, aim to broker a ceasefire. Israel has proposed a truce involving the release of Palestinian prisoners, but Hamas seeks a permanent ceasefire.

Additionally, Arab states advocate for Israel to outline a path to Palestinian statehood in exchange for normalised relations. Discussions on these matters are reportedly ongoing between Saudi Arabia and the U.S.

Potential Market Effects

Continued support from Palestine's allies, such as Iran, could inflame the situation further and put pressure on risk markets despite central bank dovish talking points. Tit-for-tat strikes can escalate and drag more countries into the conflict. 

We have witnessed in their last volley of missiles and drones that, although Israel's allies were able to intercept most attacks, the Iron Dome was overwhelmed. Another point worth mentioning was that the attack was announced in advance to allow for maximum defensive capabilities. More aggressive, non-telegraphed attacks could do serious damage and have a much more dramatic effect on global financial markets.

Another thing to keep in mind is that this could be happening over the weekend when markets are closed. This could lead to large spikes (gold) or corrections (financial markets) on the Monday open.