Israel’s attacks push up oil and defense stocks, but airlines sink as flights are cancelled.
Shares in oil and defense companies soared yesterday and airlines plunged as deadly terrorist attacks on Israel sent shockwaves through financial markets.
The price of oil rose as much as 5 percent to $89 a barrel amid fears that the conflict with Hamas will affect crude production in the Middle East.
That sent oil stocks higher: BP gained 2.9 percent, Shell rose 2.6 percent and Harbor Energy jumped 4.9 percent.
Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said: “The shocking attacks in Israel have sent the price of oil soaring, as investors assess the conflict’s potential to disrupt supplies in the Middle East, if others countries drawn in.’
Defense stocks also rose, with BAE Systems shares rising 4.5 percent on expectations that the conflict will boost military spending.
Explosions filled the sky over Gaza City during Israeli airstrikes on Monday after
But airline stocks fell on fears that fuel costs would soar due to rising oil prices.
Investors were also spooked by the conflict’s impact on travel, as major airlines including British Airways and Virgin Atlantic canceled or changed flights to Israel.
BA owner IAG fell 6.1 percent, Easyjet fell 5.9 percent, Wizz Air fell 6.2 percent and Jet2 slumped 5.4 percent.
Jonas Goltermann, deputy chief markets economist at research firm Capital Economics, said the war “comes at a difficult time for global markets and could easily increase volatility further.”
London-listed companies that do business in Israel also suffered.
Israel-based online trading platform Plus 500 fell 0.4 percent and shares of cybersecurity firm BATM Advanced Communications lost 7.7 percent.
BATM said yesterday that the company “does not expect the recent tragic events in Israel to have a material impact on trade.”
Shares in oil producer Energean, which is listed in both London and Tel Aviv, plunged 17.6 percent due to its exposure to Israel.
The Israeli shekel fell as much as 3 percent against the dollar, but recovered slightly after the Bank of Israel announced it will sell up to £25 billion in foreign currency on the open market to maintain stability.
The dollar also made gains as investors flocked to the safety of the US currency.
Ulrich Leuchtmann of Commerzbank said: “If a war breaks out anywhere in the world, it is a good idea to hold on to US dollars.”