Iran's missile attacks on Israel on October 1 night sent shockwaves through markets in Tehran, leading to losses across Iran's stock exchanges and a surge in demand for safe-haven assets like gold.

The Tehran Stock Exchange (TSE), as well as currency and gold markets, were all affected by the growing regional tensions. With geopolitical uncertainties escalating, investors have pulled out of the stock market, moving their assets into safer investments.

The missile strikes targeted several areas of Israel, escalating tensions in the already volatile Middle East. The attacks have amplified investor concerns, creating uncertainty in both domestic and regional markets. While there were rumours that trading in Tehran’s stock market would be suspended, the Securities and Exchange Organisation (SEO) convened an emergency meeting and decided not to change the price spread limits, allowing trading to continue as scheduled. The SEO stressed the importance of managing market risk while safeguarding the rights of all stakeholders, SENA reported.

The Tehran Stock Exchange saw further declines on October 2, with its main index (TEDPIX) falling by 0.41%, closing at 2.114mn points. The equal-weighted index also dropped by 0.21%, reflecting the negative market sentiment. Similarly, the over-the-counter market’s main index (IFX) fell by 0.22%, ending at 22,131 points.

Trade volumes increased by 38% from the previous day, reaching IRR22.15 trillion (roughly $35.7mn). However, this surge in trading activity was largely attributed to the sale of stocks, as investors sought to offload their holdings amid uncertainty.

The decline marks the fifth consecutive day of capital outflows from the TSE, as concerns about regional instability continue to drive investors away from riskier assets. Market data also indicates a major move towards ETFs, where investors receive a fixed interest.

Gold and currency

In the currency markets, rates experienced swings over the past 24 hours. US dollar closed October 1’s session at IRR618,500, up 2% compared to previous day’s close. It has been on growth path as of September 29 when it was priced IRR602,000. On the evening of October 1, the greenback experienced higher rates even above IRR620,000. However, on October 2, it was priced approximately at IRR618,500.

This is while payment notes in US dollars are being sold at IRR633,700 on October 2, indicating the possibility of further growths in exchange rates in upcoming days.

The Emirati dirham, which had seen significant gains earlier in the week, continued its upward trend, gaining 1.5% to finish October 2 at IRR170,100. The dirham is known as a highly influential currency in the Tehran market and any change in its price directly affects other exchange rates in days after.

The cryptocurrency market, particularly Tether (USDT), experienced heightened demand. USDT surged to as high as IRR650,000 in the past 24 hours before settling at IRR621,000.

Market analysts believe that the increased demand for Tether is a direct response to the instability in regional and global markets, with investors using the stablecoin as a hedge against volatility.

Gold prices in Iran soared on the day as investors flocked to safe-haven assets amid the rising geopolitical tensions. The price of 18-carat gold jumped by IRR830,000 to reach IRR40.28 mn. Meanwhile, 24-carat gold saw an even larger increase, rising by IRR1.1mn to IRR53.7mn.

Iranian gold bullions also saw significant price hikes, gaining IRR6.5mn (1.1%) to hit a record high of IRR475mn. Globally, gold prices rose by $7 per ounce, with the precious metal trading at $2,647, reflecting the global shift towards safe-haven assets as geopolitical tensions escalate.