— This is the script of CNBC's news report for China's CCTV on January 9, 2020, Thursday.
Let's answer the first question, how to understand market's reaction? First, Iran launching missiles at Iraq bases hosting US brought panic sentiment to financial market, but that didn't last long time as Iran's revenge was within expectation to some extent, we didn't know when and how would Iran would revenge before that really happened.
So analysts believe that it offered some chances to de-escalate the conflict after Iran released its emotions.
Richard Schmierer
Chairman of the Board of Directors of the Middle East Policy Council
"And so this might be the opportunity - in the absence of casualties - for the two sides to now say: 'okay we have each done something, we can stand down,'"
So we saw an upward trend in the U.S. stock market at the opening overnight, and then President trump made a speech, revealing that the U.S. would not immediately respond with force, and expressed some willingness for peace talks
That further solidified the rally in equity markets, while oil and gold prices fell.
We noticed that in his speech, trump also specifically mentioned that at present, the US has sufficient domestic energy supply and does not need oil from the Middle East. The fact that Iran has so far not used energy as a tool for retaliation, despite concerns about the closure of the Strait of Hormuz, has helped to dampen oil bulls and curb the price rally. Overall, the reaction of financial markets to the current round of us-iraq conflict has so far been a relatively typical cyclical performance.
Jeffrey Kleintop
CHARLES SCHWAB CHIEF GLOBAL INVESTMENT STRATEGIST
it is a classic almost a textbook response to US military strike, unfortunately, we have more than 30 years in this military strike to take a look at, see what the market's reaction is, it is a classic in the first day, you see, a modest but a significant negative response, and in the next 5 days, usually the market can fully recovered those losses, that is where we are again.
Clearly more market participants are betting their expectations on a more peaceful future at this stage but that doesn't mean there won't be accidents. For this round of US-Iran conflict, the market focus on two key words, one is revenge, one is escalation.
If it is just Iranian retaliation, the impact may be short-term, but if the conflict escalates, it could have longer-term consequences. As for the missile launch, Iran said it was "a slap in the face" to the US, but not enough, and there was also a market view that it was just the beginning of retaliation.
BOB MCNALLY
Rapidan Energy Group FOUNDER
we think they are still going to try to eject the united states from the region by attacking facilities and bases and even oil facilities of countries aligned with us in the region and so we don't think the venges in the campaign, the revenge campaign is over it is just began.
Mr. Trump said he would immediately increase economic sanctions on Iran, but it's not clear how would he do that. It remains an open question whether the new sanctions will be truly repressive and whether they will provoke more retaliation from Iran. And in that context, there are more questions about whether Trump can achieve the new nuclear deal with Iran within his presidency.
HEATHER WILLIAMS
Senior Policy Researcher at the RAND Corporation
I don't think that a deal between Trump and the administration and Iran government on the nuclear program is viable is tenable, there will not very likely be a deal in any shape or form, there may be proposals, there maybe even in a time in the future where they might be willing to sit down on a table, but the likelihood that it would be possible to shape any kind of a new deal much less like a deal that is more strengths of constraints on Iran , i guess it's wishful thinking.
We will also keep a close watch on more developments in US-Iran relations.