The final stretch of the week looks to be a nervy one

Just when you thought markets would begin putting this episode behind, the barrage of headlines just had to hit right on a Friday. It is reported that Israel made multiple strikes earlier here but Iran has been playing that down in response. It’s shaping up to be a case of Iran saying there’s nothing to retaliate to if the attack wasn’t even significant.

Risk trades were rocked by fear early on but we’re seeing some of those moves unwind naturally amid Iran’s response. Gold spiked up to $2,417 earlier but is now back down to $2,388 on the day. Equities remain a little more jittery though, with S&P 500 futures still down 0.9% currently.

If not for the fact that there is weekend risk to consider, I reckon we might’ve seen a stronger bounce back in markets. But also keep in mind that when the headlines hit earlier, it was during lighter trading conditions. So, the initial reaction might have been an outsized one.

In any case, there is still the likelihood of investors choosing to play it safe before the weekend. And that could keep stocks in particular pressured to the downside, rounding off a full week of losses in Wall Street.

As mentioned before, this is very much a timely development to help stocks come off the boil after the unrelenting run since November last year. In the bigger picture, this is an event that will fade into the background. And in the case of markets these days, it often doesn’t take that long. But at the same time, do take into account the price developments on the charts as well. Buy value, sell hysteria.

This article was written by Justin Low at www.forexlive.com.