Afrasianet - *Sherif Othman - In the summer of 2019, an unexpected attitude emerged from US President Donald Trump when he halted at the last minute a US military strike against Iran, despite a major escalation after Tehran shot down a US drone.

Despite official justifications for "caring for lives," many analysts linked Trump's reluctance to a fundamental economic factor: his keenness to maintain the momentum of U.S. stock markets, which were making historic gains at the time.

Trump was, and still sees, the rise in US stock prices as one of his most prominent achievements, which made him unwilling to risk undermining investor confidence by entering into an open war that may confuse the markets and hit the stability of the US economy, which before recently, was reeling due to protectionist policies and excessive tariffs, which Trump announced his intention to impose, which Netanyahu seems to have decided to ignore.

Wall Street sees the war between Iran and Israel from a different perspective from media and political coverage: while talk is publicly focused on military conflict and geopolitical tensions, financial markets view the event in terms of the direct impact on oil, risks to capital movement, and the degree of potential disruption to global supply chains.

Investors on Wall Street view the war not merely as a political event, but as a determining factor for price trends, liquidity shifts, and new opportunities or risks emerging in global markets.

With the outbreak of any confrontation between two powers of this magnitude and influence, the first reactions were in energy markets, especially the oil market, where Iran is a major oil producer and effectively controls the Strait of Hormuz, through which a huge proportion of Gulf exports to the world pass.

Any threat to close the strait, whether temporary or indirect, pushes oil prices up sharply, which has already translated into rapid moves on the energy exchanges of New York and Chicago.

At the same time, the escalation against Israel has disrupted offshore gas exports to Europe and other destinations, adding further pressure to energy markets already fragile since the start of the Russian-Ukrainian war more than three years ago.

Oil prices are not the only problem for Wall Street, as wars have traditionally caused general turmoil in emerging markets, and an accelerated exodus of capital from them towards so-called "safe havens" such as the dollar, US bonds, and gold.

This behavior raises demand for US assets and leads to a decline in the currencies and markets of neighboring countries Iran and Israel, such as Turkey and Egypt, and the Gulf states, which is closely monitored by investment funds and US financial institutions.

In any case, geopolitical risks are pushing investors to be more cautious, forcing them to redistribute portfolios to keep them away from volatile markets.

Another concern for Wall Street is the widening of the conflict. If the war remains confined to-for-tat attacks between Iran and Israel, or stops altogether — as Trump announced on Monday — markets could gradually absorb the shock.

If the conflict spills over to Iran's allies in Lebanon, Iraq, Yemen, or tankers in the Red Sea, which cannot yet be completely ruled out, the situation will become increasingly dangerous.

Insurers will raise their prices on oil and cargo shipments, increasing international trade costs, reducing corporate profits, or raising inflation rates in most of the world's economies.

Shipping and insurance stocks will be immediately affected by such shifts, and Wall Street traders will move quickly based on their assessment of the magnitude and sustainability of the risks.

Wall Street also watched the American reaction closely, and after the direct intervention of the United States in the war, the balance of power certainly changed, and the financial calculations of the White House changed, especially in light of the large US budget deficit.

Any additional U.S. military involvement could increase defense spending, which the military industry may welcome, but at the same time raises fears of widening public debt and rising interest rates, which will have negative effects on economic growth and, consequently, on stock markets.

The technology sector may be the least affected by the war, but it will not remain immune to it, as expected cyberattacks between Iran and Israel may disrupt some financial or technical services, and digital infrastructure may become an arena for confrontation.

Wall Street is following these possibilities, especially since companies listed on the Nasdaq are heavily dependent on cyber stability, and any widespread threat in this area could cause shocks in the shares of technology companies that are highly sensitive to geopolitical turmoil.

Parallel to these risks, Wall Street is not without a speculative mentality on crises, as there will always be those who see war as an opportunity to profit, whether by betting on higher oil prices, buying shares of defense companies (which are certainly not acceptable from Sharia), or even investing in gold and cryptocurrencies as alternative assets.

Therefore, it is expected that not all markets will always move in one direction, but rather oscillate in a mixture of fear and greed, as in any major crisis.

The decisive factor in Wall Street's assessment of the war remains "time": the longer the conflict lasts, the deeper the economic fallout, and hedge funds and investment banks rush to adjust their medium-term strategies, which would have turned the anxiety into a broad correction in global markets.

Now that the war is already over and the international powers have quickly contained the escalation, markets have absorbed the effects of the strike and returned to their previous course, settling for some temporary changes that will not cause significant disruption in the longer term.

Despite all of the above, it cannot be said that the economic factor alone was behind Trump's quest to contain the crisis and announce a quick ceasefire, as there was great pressure from international powers, including China and Europe, to avoid further chaos in the region.

Deterrence balances have also played an important role, as everyone understands that open war will be costly and uncertain outcomes. To be sure, however, the economy has been a pivotal factor in reducing the appetite for war, as both America and Israel recognize that war cannot be financed without a stable economy, nor can it be won in a fragile financial system.

Like all major events, Wall Street did not look at the war between Iran and Israel from a moral or political perspective, but read it in the language of numbers and possibilities, and sought to determine who hurts and who benefits, using cold calculations in a world of events in which capital always moves towards what seems safe or profitable, even if it is behind the clouds of war.

*An Egyptian economist and banker specializing in monetary policies, stock and bond markets.