Stock market falls due to Iran war

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• Stock markets react negatively to new tensions in the Middle East after hopes of an easing of tensions are dashed.
• The SMI falls sharply, with some of the losses attributable to Nestlé's dividend discount.
• At the same time, oil and gas prices rise sharply as investors anticipate further escalation.

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Shattered hopes of peace in the Middle East are causing disillusionment on the Swiss stock market on Monday. After expectations of an imminent solution to the conflict had driven prices up on Friday, the European stock exchanges are now losing ground.

On Saturday, Iran reversed the opening of the Strait of Hormuz on the grounds that the USA was maintaining its blockade of Iranian ports. After signs of an easing in the conflict between Iran and the US on Friday, the setback in the peace process is now weighing on the markets.

"However, investors seem to be getting used to the situation and are continuing to bet on an early solution to the conflict," commented one trader. The bottom line, however, is that the phase of uncertainty is extending. "Iran represents a completely different kind of adversary for the US and Israel than expected."

SMI distorted by Nestlé dividend

At around 9.45 a.m., the SMI loses a significant 1.5 percent to 13,221 points, after rising by almost 2 percent on Friday. On the international stage, the German DAX falls by 1.3 percent and the FTSE 100 in London by 0.6 percent.

However, some of the losses are attributable to index heavyweight Nestlé (-3.5%). These are traded ex-dividend on the day of the report and would otherwise even be slightly up. The SMI excluding dividends therefore only lost around 1%.

All stocks in the SMI except Swisscom (+1.0%) are down, most notably cyclical stocks such as those of the building materials groups Amrize (-4.4%) and Holcim (-2.5%).

Commodity prices at a high

With concerns about increasing tensions between the USA and Iran, the price of crude oil has risen significantly again. The price of a barrel of North Sea Brent crude for delivery in June started the trading week at just under USD 97, more than seven percent higher than on Friday. The Brent price is currently up by almost six percent to 95.70 dollars. Gas prices in Europe have also risen sharply.