Markets may underestimate the impact of a conflict between Israel and Iran, market analysts warn as the shares rose on Monday despite the escalation of war conflicts in the Middle East.

The two regional forces continued to exchange fire on Monday, marking the fourth consecutive day of clashes since Israel launched air strikes against Iran last week.

Despite the ongoing conflicts – with hundreds of dead reported – world stock markets have maintained a positive dynamic on Monday, not paying particular attention to wider conflict concerns.

Russ Mould, an investment manager at AJ Bell, warned that there was a risk that markets would underestimate “the risk of a major fire in the Middle East”, especially in the energy market.

European stocks were generally higher on Monday, with the Asia-Pacific region shares and US shares futures also negotiating in the green. Even the Middle East indicators made profits on Monday, with the Tel Aviv 35 index lasting 1% higher after a 1.5% drop last week.

In a morning note on Monday, David Roche, a strategic analyst of Quantum Strategy, warned that the conflict between Israel and Iran “will last longer than the market is used to.”

Torbjorn Soltvedtp, an analyst for the Middle East at Verisk Maplecroft, agreed, saying that a escalation remains “huge concern”.

“What we have now is very different, and what we are seeing is essentially a war and even with an uncertain expiration date,” CNBC told the Squawk Box Europe show.

“And of course, this is something that has a huge impact, not only for the region, but also for energy markets and how they interpret what is happening. You know, minute by minute and day by day, “he added.

Energy market

In the energy market, although on Friday there was the largest daily rise for the crude from Russia’s complete invasion of Ukraine in 2022, the contracts for future fulfillment of crude Brent, global reporting, which was last at $ 73.75 a barrel, were still much lower than the prices.

“A respite is the most likely result before the subsequent escalation, when Iran rejects Trump’s openings,” Roche said. “The market is likely to confuse the respite with permanent peace. I would use the respite to buy in energy assets as a safe haven, “he noted.

‘Very mild’ market reaction

However, some market observers adopt a somewhat less pessimistic view.

In a note on Monday, Deutsche Bank’s Jim Reid noted that while both Iran and Israel exchanged retaliation blows, they had so far avoided “the most extreme steps of escalation”.

“The typical pattern is for the S&P 500 to recede by about -6% in 3 weeks after the shock, but then fully ascending to another 3 weeks,” Reid said.

Philippe Gijsels, head of BNP Paribas Fortis, told CNBC on Monday that he believes the market is right that does not invoice a huge escalation, such as US involvement in the dispute or blocking the strait of Ormuz.

The strait of the Ormuz, located between Iran and Oman, is a vital oil transit pathway through which millions of oil barrels are transported every day.