To The Moon

The world did not have to wait a further 2 weeks to find out if US will get its feet wet in the latest Israel-Iran saga.

On Sat, 21 Jun 2025 night (US time), Trump joined forces with Israel to attack 3 locations in Iran, that are supposedly Iran’s nuclear facilities.

Politically it was supposed to eliminate Iran’s nuclear capabilities.

However, it has been proven in the past that US could be mistaken.

For instance, on 19 Mar 2003, Republican president George W. Bush started a war to free Iraq and find its weapons of mass destruction, but no such weapons were ever found because they did not exist.

Based on the latest developments, US stock market is likely to experience significant volatility when trading resumes on Mon, 23 Jun 2025.

What can investors expect ?

Market-Wide Impact

Immediate downturn:

• Anticipated "knee-jerk" stock market selloff, driven by fears of prolonged regional instability and surging oil prices is likely to happen now that US got involved.

Oil price surge:

• Crude oil (WTI) could spike beyond the current +9% to +10% increase since 12 Jun 2025, amplifying inflation concerns and vapourizing expectations of a Fed’s cut anytime soon.

Safe-haven flows:

• Demand for US dollar and gold may rise once again, while sectors tied to consumer spending could weaken.

Sectors’ Performance (Predictions)

Likely Gainers:

(1) Energy (XLE):

• Direct beneficiary of rising oil prices; supply disruptions would further boost energy stocks, in the immediate term.

• Example - $Exxon Mobil(XOM)$, oil stock has been on the rise since 5 Jun 2025. (see below)

(2) Aerospace & Defense (XAR):

• Increased military spending and procurement demand will drive gains.

• Example: $RTX Corp(RTX)$, despite talks about transforming US defense away from capital intensive weaponry, veteran military contractors like Raytheon Technologies Corp. remains relevant at times like these, rising steadily since May 2025. (see below)

(3) Industrials (XLI):

• Defense contractors and logistics firms within this sector would benefit from conflict escalation.

(4) Materials (XLB):

• Gold-mining exposure (via funds like AUMI) could rise as investors seek safe havens.

Likely Decliners:

(1) Consumer Discretionary (XLY):

• Higher energy costs would reduce disposable income, hurting retail and luxury goods.

• Example: $Tesla Motors(TSLA)$. This EV maker has been volatile lately due to US factory shutdown to mitigate falling demand. For the past month, it has fallen by -3.72%. (see below)

(2) Technology (XLK):

• Vulnerable to broad risk aversion and potential supply-chain disruptions.

• Example: $Apple(AAPL)$ has fallen marginally based on past month performance. It slipped -0.54% as of 20 Jun 2025, and trading below its 50-day & 200-day moving averages.

• Its recently concluded WDC techno fest did not provide a notable or sustained boost to investor confidence with AAPL remaining well below its 52-week high.

(3) Financials (XLF):

• Banking stocks could face pressure from economic uncertainty and delayed rate cuts.

• Example: Coming week will test $JPMorgan Chase(JPM)$ resilience. For the past month, JPM has risen by +5.35% and is showing no sign of slowing down. (see above)

Key Uncertainties

• Iranian retaliation: Further attacks on shipping lanes or US assets could exacerbate market stress.

• US further attacks: Although Trump has declared it is time for peace on Truth Socia (following the bombings), there is nothing to stop the man from renegading on his words ?

Analysts’ Weigh In.

Following are comments from some financial analysts:

(1) Potomac River Capital, Chief investment officer, Mark Spindel:

• Markets are expected to react with concern, and oil prices will likely rise.

• There is no damage assessment yet, so uncertainty remains high.

• This uncertainty may cause more market volatility, especially in oil.

• There is still time to consider the situation before markets’ futures open on Sunday.

• Early signs will come when US dollar starts trading in New Zealand.

• Trump’s recent bold action is a sharp change from earlier talks about negotiations.

(2) Harris Financial Group, Managing partner, Jamie Cox:

• Oil is sure to spike on this initial news, but will likely level in a few days.

• With this demonstration of force and total annihilation of its nuclear capabilities, Iran have lost their leverage and will likely hit the escape button to a peace deal.

(3) Siebert Financial, Chief investment officer, Mark Malek:

• The news is expected to be very good for US stock market.

• Earlier, there was concern about 2 weeks of market ups and downs while waiting for updates from the White House.

• Making a decision now is seen as better than waiting.

• The situation seems like a single event, not the start of a long conflict, which is reassuring for investors.

• The main risk is the Strait of Hormuz; if Iran closes it, things could change quickly.

Cresset Capital, Chief investment officer, Jack Ablin:

• US involvement added a new and complicated layer of risk that investors will have to consider and pay attention to

• This is definitely going to have an impact on energy prices and potentially on inflation as well.

US involvement in Middle East saga will cause US national debt to balloon, US economy & market to weaken faster. Time to be compose, wait for the crash, then swoop-in for the kill?

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• Do you think US market will rise or fall with US getting involved in the attack ?

• Do you think it’s wise to just jump-in and grab the bargins (if avail) OR wait for even better fire-sales further down the road ?

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