ETFs Highlight Market Turmoil of Iran Conflict

Market Reaction to US-led Attacks on Iran - The US-led attacks on Iran have caused significant volatility in sector ETFs, with defense, oil, gold, and crypto assets initially performing well, while airline ETFs and emerging markets suffered declines [1][2] - The Vanguard S&P 500 ETF (VOO) experienced a minor decline of less than 1% as of market close on Tuesday [1] Investor Sentiment - Investor sentiment has shifted towards fear following the attacks, with markets showing increased concern over the situation [2] - Historical patterns suggest that while markets may initially react negatively to invasions, they often recover in the weeks that follow [2] Sector Performance - Oil prices surged as approximately 20% of global petroleum shipments through the Strait of Hormuz were disrupted, leading to a 2% increase in the State Street Energy Select Sector SPDR ETF (XLE) over five days [3] - The Amplify Breakwave Tanker Shipping ETF (BWET) rose 5% over five days after a previous decline of 13% [3] Gold and Safe Havens - Gold prices initially rose but fell on Tuesday, attributed to profit-taking and a flight to the US dollar, as well as changing expectations regarding Federal Reserve rate cuts [4] - The SPDR Gold Trust (GLD) ETF fell 4.5% on Tuesday, resulting in a five-day decline of over 1.5% [5] Airline and Emerging Markets Impact - Airline stocks dropped significantly, with the US Global Jets ETF (JETS) declining 5% over five days, including a 1% drop on Tuesday [5] - The iShares Core MSCI Emerging Markets ETF (IEMG) fell by over 5% on Tuesday, contributing to a five-day drop of over 6% [5] - The iShares US Aerospace & Defense ETF (ITA) rose 2% on Monday but experienced a corresponding decline on Tuesday [5]