Markets have been volatile following the outbreak of the US-Iran war, but recent trends suggest a shift in investor sentiment.
The stock market initially plummeted 600 points on Monday morning, with major indices such as the S&P 500 and Dow Jones experiencing significant losses. However, by the end of trading, the market had staged a dramatic recovery, with the S&P 500 rising 0.04% to 6,882 and the Nasdaq climbing 0.36% to 22,749.
The rally was led by tech giants such as Nvidia and Microsoft, which rose 3% and 1.5%, respectively, as investors bet on their ability to withstand the conflict's impact. Defense and energy stocks also performed well, with companies like Northrop Grumman and Lockheed Martin rising 6% and 3%, respectively.
Meanwhile, oil prices, which had initially surged 12%, eventually retreated to a gain of around 6-8%. The sharp increase in oil prices had raised concerns about inflation, but the subsequent decline eased these worries. Despite this, some analysts warn that if oil prices were to break above $100 per barrel, it could lead to a loss of control over inflation.
In another surprising development, Bitcoin prices surged to a new high of around $68,000, breaking the previous record. The cryptocurrency's price was driven by investor sentiment that the conflict would be short-lived and that gold and cryptocurrencies are becoming increasingly popular as safe-haven assets.