Goldman Sachs CEO Solomon: The market's mild reaction to Iran is surprising and may take a few weeks to truly digest

The financial market's reaction to the Middle East war has been surprisingly calm. Goldman Sachs CEO David Solomon stated that he was surprised by the situation, but he also warned that it would take weeks for the market to fully digest the impact of this conflict. According to Bloomberg, Solomon said on Wednesday at the Australian Financial Review Business Summit in Sydney, "There are still too many unknowns at this point, and investors are assessing whether this conflict will evolve into a protracted war and whether it will begin to impact consumption. The U.S. commitment to ensuring the safety of shipping in the Strait of Hormuz has stabilized market sentiment to some extent." Meanwhile, the shockwaves from the Iran war continue to spread. Israel has launched a new round of airstrikes on Tehran, while Iran has fired missiles at Qatar, Bahrain, and Oman, with Qatar stating that the targets are not limited to military facilities. In terms of inflation expectations, rising oil prices have triggered market concerns about a resurgence of inflation, and traders are adjusting their expectations for a rate cut by the Federal Reserve. According to Xinhua News Agency, since the U.S. and Israel launched military actions against Iran, U.S. President's Special Envoy for Iran, Robert Malley, has not had any diplomatic contact with the Iranian side. The market needs a few weeks to truly digest the impact of this conflict "I see the market's reaction, and I am actually quite surprised," Solomon said, "The market's response has been relatively mild." He stated that given the current situation's many unknown variables, it is difficult to make predictions at this stage. However, Solomon also pointed out that the spike in the VIX index and other volatility indicators was not unexpected . "The market needs a few weeks to truly digest the impact of this conflict," he said, noting that everything happening will have a cumulative effect and could lead to a stronger reaction. So far, this cumulative effect has not been observed. The inflation pressure brought about by rising oil prices has led the market to reprice the Federal Reserve's monetary policy path, and the risk of inflation rebound triggered by the Iran war threatens the global economy. Solomon stated that the U.S. backing for the security of shipping in the Strait of Hormuz is one of the key factors currently supporting market sentiment, but whether this situation can be sustained remains to be seen in the developments over the next few weeks. Despite rising geopolitical risks, Solomon remains optimistic about the medium-term outlook for the U.S. economy. He pointed out that the onset of a loose monetary cycle and significant deregulation have provided solid support for the U.S. economy