Paramilitary group Hezbollah has been relatively quiet since the start of the Hamas-Israel war 28 days ago.
No more. Western leaders, including the U.S. and France, have urged Hezbollah to stay out of the conflict.
But the warning seems to have fallen on deaf ears. While there had been limited engagement with Israel along the southern border of Lebanon, support from Russia's Wagner Group is expected to change that.
Also Read: Marjorie Taylor Greene Proposes Conditions For Israel Funding
Hezbollah's leader, Hassan Nasrallah, recently made a brief appearance in a video, hinting at a potential shift in their approach to the conflict, per CNN. An upcoming speech will be closely watched for answers to key questions:
How closely coordinated have Hezbollah's actions been with Hamas, given their tenuous alliance? Has the militant organization, which operates as a Shiite Muslim political party, received backing from Iran? And how powerful is its weaponry (i.e., precision-guided missiles and drones)? Their recent use of a self-detonating drone in an attack on an Israeli military position highlights their capabilities.
Israel has warned Lebanon not to “sacrifice your future for Hamas”, ahead of Nasrallah's speech.
Up to 9,227 Palestinians have been killed, including 3,826 children, in Israeli strikes on Gaza since Oct. 7, the health ministry in Hamas-controlled Gaza said on Friday.
Meanwhile, in addition to Hamas and Hezbollah, observers expect the Houthis of Yemen to also enter the conflict. The so-called 'H' problem has raised concerns that Israel may be vulnerable across the entire Red Sea region.
U.S. Secretary of State Antony Blinken is currently on a visit to Israel where he, once again, reiterated support.
“We stand strong for the proposition that Israel has not only the right, but the obligation to defend itself to make everything possible to make sure that October 7 can never happen again,” Blinken reportedly said alongside Israeli President Isaac Herzog. However, he apparently also pressed for a pause in fighting:
Blinken presses for pause in Gaza fighting on visit to Israel amid fears war could widen https://t.co/k9e6lD7zhJ
— The Associated Press (@AP) November 3, 2023
Market Reactions
CNBC cited a Goldman Sachs (NYSE: GS) research note expressing concern that the escalating conflict could affect European economies due to lower regional trade, tighter financial conditions, higher energy prices and lower consumer confidence. The note echoes concerns expressed by the World Bank earlier this week, that crude oil prices could rise to more than $150 a barrel if the conflict escalates.
Even though the U.S. dollar index (DXY) has dipped to 105.922, it's still above the 200-day moving average of 103.505 underscoring a bullish outlook.
Treasury yields, however, are on a downward trajectory, signaling an increased demand for bonds. The 10-year Treasury yield is at 4.68% — a two-week low.
Stocks and ETFs to watch include:
US 10-Year Treasury Note ETF (NASDAQ: UTEN) Direxion Daily S&P Oil & Gas Exp & Prod Bull 2X Shares (ARCA: GUSH) Direxion Daily S&P Oil & Gas Exp & Prod Bear 2X Shares (ARCA: DRIP) Marathon Oil Corporation Corp (NYSE: MRO) Exxon Mobil Corp (NYSE: XOM) Chevron Corporation (NYSE: CVX) Occidental Petroleum Corporation (NYSE: OXY) Lockheed Martin Corp (NYSE: LMT) L3Harris Technologies Inc (NYSE: LHX) General Dynamics Corp (NYSE: GD) Northrop Grumman Corp (NYSE: NOC) RTX Corp (NYSE: RTX)
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