Israel-Hamas war will have a limited effect on markets

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Markets shook off fears
U.S. stocks rose Monday despite a 4% spike in oil prices caused by the Israel-Hamas war. Even the Russell 2000 rose, signaling investor confidence. Asia-Pacific markets mostly followed Wall Street higher Tuesday. Japan’s Nikkei 225 popped around 2.5%, led by gains in energy stocks and trading houses. However, mainland China’s Shanghai Composite dipped 0.5%.

‘Complete siege’ of Gaza Strip
Israel continued bombarding the Gaza Strip with airstrikes Monday — and planned to cut off electricity, water and food supplies — as part of its response to Saturday’s attack by Palestinian militant group Hamas. Deaths on both sides have exceeded 1,500 so far. Meanwhile, Iran’s permanent mission to the United Nations denied the country’s involvement in Hamas’ attack on Israel.

Barren garden
Shares of Country Garden plunged more than 7% after the troubled Chinese real estate developer failed to make a debt repayment of 470 million Hong Kong dollars ($60 million) Tuesday. Worse, Country Garden said it might not be able to make all of its offshore repayments, including those issued in U.S. dollars. Contracted sales in September dropped 80.7% from a year ago.

Booming digital economy
Singapore’s digital economy contributed 106 billion Singapore dollars ($77.5 billion) to the economy last year, comprising more than 17% of gross domestic product. By contrast, in 2017, the amount was SG$58 billion, which made up 13% of GDP. “Despite the recent tech sector lay-offs, the demand for tech jobs is likely to remain resilient,” said the country’s Infocomm Media Development Authority.

[PRO] ‘Bright spot’
Japan’s market is a “bright spot” globally now, said Goldman Sachs. One sector of the market has rallied around 30% so far, thanks to two developments within the country. And Goldman thinks these two stocks, which are on the bank’s conviction list, can rise close to 20%.

Major indexes rose despite the geopolitical upheaval in the Middle East.

Of course, some might attribute that increase to the usual suspects benefiting from armed conflicts. Oil and gas giants popped on rising crude futures. Defense stocks were also bolstered, especially after Bank of America said the U.S. government could increase defense investments.

But Anna Rathbun, chief investment officer for CBIZ Investment Advisory Services, thinks those movements in specific sectors are mostly “a knee-jerk reaction” because investors aren’t sure how the Israel-Hamas war will play out.

 “So there’s dust going up, and now the dust is coming back down,” Rathbun said. “I think it will take a few days to…