Middle East geopolitical tensions

What happened: Tensions in the Middle East escalated on Tuesday, February 14, when Iran launched a ballistic missile attack against Israel. This followed Israel's "limited" raid into southern Lebanon, which was denied by Hezbollah. The U.S. reinstated its blockade on Iranian oil exports, effectively preventing Iran from exporting oil, making its oil volumes irrelevant to global oil market balances.

Market impact: European stocks closed lower on Tuesday due to these geopolitical tensions. The Canadian stock market also slid on Thursday, with concerns over Middle East tensions and a surge in producer prices weighing on shares from sectors such as financials, communications, consumer staples, and healthcare.

What to watch next: On February 17, the U.S. and its allies are expected to discuss further actions against Iran at the UN Security Council. Additionally, investors will be watching for any retaliation from Iran or its allies, which could further impact global oil prices and equity markets.