How Israel-Hamas war has created an opportunity for investors to grab large-cap stocks

livemint.com:

global market signalled a moderation in bond yields. However, the release of higher-than-anticipated US inflation data and resulting increase in Treasury yields marginally offset some of the positivity by the end of the first week of the war. However, the market moved to the weekend believed to be safe and sound.

But the outset of the second week proved challenging, as the complexities of the war & ground operations became more evident, and the start of Q2 results were subdued, particularly in the IT and banking sectors. The rising Middle East risk (hospital bombing issue) fuelled selling in the market. Persistent geopolitical tensions weighed heavily on market sentiment, leading to an overall decline.

Oil prices moved higher, UK Brent price crossed 93$ by Friday evening, up from 83.47$ closing on 6th Oct, a big factor for heavy importers of crude like India. Similarly, the US bond yields were cautiously placed high ahead of the Thursday US Fed chair’s speech. And it continued to stay put post the speech, which instigated the possibility of a rate hike in the future, depending on economic data, and to reduce the level of liquidity in the financial market to sustain high interest rates in the economy.

Ending the week at 4.95%, these figures resembled levels witnessed before the 2008 global crisis. However, it is worth mentioning that the bond yield is expected to reach its peak in the upcoming quarters. Due to a sharp fall in inflation, US CPI monthly stands at 3.7% Sept 2023, down by 400bps from 7.7% in Oct 2022.