Investors Are Running To These Assets Amid The Israel-Hamas Conflict

As the Israel-Hamas conflict intensifies, global investors are increasingly seeking refuge in defensive assets, reflecting the war's potential ripple effects on worldwide markets.

Following Israel's declaration of war on Hamas, which came in response to the latter's devastating attack resulting in around 1,300 casualties, global stock markets took a hit but soon regained their footing, reported CNN.

Despite the market's recovery, the rising demand for risk-averse government bonds indicates that Wall Street remains wary.

An ETF tracking U.S. Treasury bonds with long-term maturities has seen a 1.5% increase this week. Notably, sectors like utilities, energy, and real estate, including companies like NextEra Energy Inc. NEE and Realty Income Corp. O, have outperformed the broader S&P 500 index, registering gains beyond its 1% weekly rise.

Such sectors are traditionally considered defensive, as they cater to essential consumer needs.

Oil prices have also been volatile, with concerns growing about the conflict's potential to draw in major oil producers, which could further tighten the global crude supply.

Also Read: How The Israel-Hamas Conflict Could Impact Oil Markets

This is especially significant given the recent production cuts by nations such as Saudi Arabia and Russia.

"Any chatter that Israel, now seemingly focused on shutting down Hamas’ operations, is preparing to strike beyond the immediate conflict, will escalate upward pressure on prices," George Smith, a portfolio strategist at LPL Financial, told CNN.

Gold, another safe-haven asset, has risen approximately 2% this week, reversing its previous downward trend influenced by surging bond yields and a robust US dollar.

Bryan Hinmon, CIO at Motley Fool Asset Management, pointed out to CNN the potential financial strains for the U.S. if the country chooses to back Israel financially, on top of the former's ongoing support for Ukraine against Russia.

Now Read: Trump Boldly Declares 'Only I Can Protect Israel' Amid Raging Middle Eastern Conflict: 'Nobody Else Will, Nobody Else Can'

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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