Iran Emerges From Shadows With Direct Strike In Iraq

Iran has launched a missile attack on a site in Iraq, alleging it to be an Israeli espionage base, marking its direct involvement in the Israel-Hamas conflict.

Focused on the city of Ibril in the semi-autonomous region of Kurdistan, four civilians were reported to have been killed in the attack, and six wounded.

It was the first overt military action from Tehran — even though Iran has already been backing Hamas and Yemeni Houthi rebels, and their campaign to disrupt shipping in the Red Sea. Until now, Iran’s involvement had been limited to rhetoric and deploying a ship to the Red Sea.

Iran Explains Response — World Condemns It

Iran said it was acting in response to the Israeli “assassination of a number of commanders of the IRGC and the resistance front,” referring to the alliance of militias that it backs, including Hamas and Hezbollah.

On Tuesday, the country’s foreign ministry said the attack was just a part of its response to those who threaten its security — suggesting it could become more deeply involved, although it has previously stated it wouldn’t participate in a wider conflict.

The attack was met with a deluge of condemnation. The U.S. called it a “reckless and imprecise” response, while Iraq — whose ambassador was recalled from Tehran — said it was a “blatant violation of sovereignty.”

The UN mission in Iraq added: “Attacks, by any side, violating Iraqi sovereignty and territorial integrity must stop.”

Also Read: Shell Suspends Red Sea Shipments As Yemen’s Houthi Strikes Intensify: ‘An Attack On The Global Economy,’ Blinken Says

Markets Little Affected

Stock markets across the world moved a little lower in response. The S&P 500 was down 0.2% in morning trading, while the SPDR S&P 500 ETF SPY which tracks the index lost 0.4%.

Oil markets appeared to show little impact. Both Brent Crude and Nymex WTI were around 0.4% lower in morning trading, while the United States Oil Fund USO an exchange traded fund that tracks the price of light-sweet crude, fell 0.6%.

“For commodity markets, the increased tension poses supply risks, with energy markets most vulnerable. However, for oil and LNG, we are not seeing any fundamental impact on supply yet,” said Warren Patterson, chief commodity strategist at ING.

Nor was there any sign of haven buying — a shift away from risk assets such as equities, into so-called safe havens such as gold and Treasury bonds. The SPDR Gold Shares ETF GLD was down 0.7% in line with the price of spot gold. Treasury yields were higher, indicating bonds were being sold off.

The rise in tensions in the Middle East have had little impact on defense stocks in recent weeks, but they could see increased interest from investors if national defense budgets are raised in response to the rising geopolitical turmoil.

The largest exchange traded fund that tracks defense stocks is the iShares U.S. Aerospace & Defense ETF ITA, but it is down around 5% so far in 2024 due to its large weighting of Boeing Inc BA shares, which have fallen sharply since the Alaska Airlines incident earlier this month.

Israel-Hamas Day 102

In Israel, there was no comment on Iran’s attack on Iraq, however, Defense Minister Yoav Gallant said the “intensive stage” of its Gaza offensive would “end soon.” This followed reports that one of Israel’s army divisions had exited the Gaza Strip on Monday night.

Hamas, meanwhile, said on Tuesday that around 10,600 children had been killed during Israel’s offensive since Oct. 7. The total death toll in Gaza is thought to be around 25,000.

Now Read: End Of The Peace Dividend? Stocks That Could Benefit From Higher Defense Spending In 2024

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