Iran Just Attacked Kuwait | Stock Market Crash Incoming?
In a Nutshell
Iran closed the Strait of Hormuz and launched a surprise ballistic missile attack on Kuwait, killing US soldiers and targeting US military systems just before markets open. Oil prices are expected to spike, which will increase inflation and pressure equity markets while benefiting oil-related assets. The NASDAQ remains near all-time highs, but semiconductor and tech stocks face downside risk in a potential 10-20% pullback, making risk management and cash reserves essential.
These notes were generated by AI and may contain inaccuracies.
On July 12th at 12:24 p.m., two specific developments that were not wanted over the weekend have been announced. The timing is notable because these attacks are occurring close to when markets open, which deviates from the recent pattern where the Strait of Hormuz would close on Friday after markets closed, followed by peace talks by Sunday as overnight hours began.
Iran has announced that the Strait of Hormuz is closed. This development matters because oil passes through the Strait of Hormuz. Oil has recently declined in price, and oil is one of the biggest contributors to rising inflation. A few weeks ago, Trump announced that the United States only had four weeks left of reserves, which prompted him to sign a peace deal with Iran. During the period of peace talks with the US and the announced ceasefire, Iran was passing as much oil as possible through the Strait of Hormuz to ensure that if they had to close it, they could close it for a longer period of time.
If oil cannot pass through this trade route, oil prices will likely increase. This is positive for those who bought the dip on oil stocks and ETFs, but negative for equity stocks because rising oil prices impact airlines, consumers, and producers, which will be reflected in rising inflation rates based on the PPI and CPI reports.
Initial reports indicate that the IRGC attacked US warships operating in the Strait of Hormuz, with multiple explosions occurring near Bandar Abbas. These attacks are happening literally moments before overnight hours open and a few hours before futures open.
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