Why markets are ignoring the idea of a bigger conflict between the US and Iran, for now

Global financial markets shrugged off U.S.-Iran tensions because they are not expected to escalate into a larger military conflict or seriously impact the global economy — at least for now.

U.S. stocks were sharply higher Wednesday and oil prices plunged, even though Iran attacked U.S. military bases in Iraq overnight. Stocks moved even higher later Wednesday, with the S&P 500 powering to a new all-time high and West Texas Intermediate oil futures breaking below $60 per barrel, after President Donald Trump defused some of the concerns by saying Iran “appears to be standing down” and that he doesn’t want to have to use military force.

Stocks initially plummeted globally and oil shot higher right after Iran’s missile strikes, shortly after the U.S. market close Tuesday.

The attacks largely resulted in infrastructure damage, and no human casualties were reported. Iran had warned Iraq about the assault ahead of time, and also announced the missile strike had “concluded proportionate measures” against the U.S., in retaliation for the American killing of Iranian Gen. Qasem Soleimani.

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