Stocks Dump, Iran vs Israel

The markets are experiencing a flight to safety due to concerns that Iran may retaliate for the recent embassy bombing in Syria. Iran's Supreme Leader Ayatollah Ali Khamenei and President Ebrahim Raisi have both made statements suggesting that Israel will face consequences for the attack.

There are unconfirmed reports suggesting that Iran may respond within the next 48 hours, potentially through large-scale drone strikes in Israel, which could escalate tensions significantly. Israel stated that the target was not an embassy, but a military building belonging to the Quds forces.

-The S&P 500's sharp drop in the last couple hours

The spike in Brent crude oil surpassing $90 reflects concerns about potential disruptions in Iran's oil production and exports. Israel has targeted energy infrastructure inside of Iran recently.

Overall, the market is exhibiting classic signs of risk aversion, with U.S. equities reversing course rapidly in response to the sharp increase in geopolitical tensions.

In recent days, gold and silver have been surging and this was attributed by many news outlets to increased potential interest rate cuts. At the same time, the stock market was floundering, and the same news outlets attributed this to decreased potential interest rate cuts. Obviously, something else was happening, as precious metals and the stock market do not live in alternate realities.

-Silver's movement this week (in Australian Dollars)

Today, the real problem has shown its face: Uncertainty. When stocks are muted and gold and silver rise aggressively, the typical reason is fear. Currently, it is in the form of one of the biggest geopolitical threats in potentially decades, on the back of mixed messages about monetary policy from central banks.

Tonight there is also another huge potential catalyst at 11:30PM Melb/Sydney, 10:30PM Brisbane time. The Non-farm Payrolls report will be released. This is typically the most traded event of the month as it shows changes in U.S. employment. This could be a potential one-two punch for the stock market, or possibly a lifeline.

Nonfarm payrolls in USA are forecasted to increase by 200K in March. Traders and investors are always on the lookout for a result which is significantly higher or lower than the forecast. Gold has the potential to react more strongly to a surprise decrease in jobs. Although, if military action between Israel and Iran escalates, it could potentially override any economic data.