Effect of Commodities and Dollar on Energy-Material Stocks during Iran-Israel Conflict
DOI:
https://doi.org/10.56456/jebdeker.v6i2.937Keywords:
Stock Returns, Oil, U.S.Dollar Index (DXY)Abstract
This study aimed to examine the effect of oil, gold, and the U.S. Dollar Index (DXY) returns on stock returns of energy and materials sector companies listed in the S&P 500, and to assess the moderating role of geopolitical tensions between Iran and Israel in 2025 in this relationship. Geopolitical instability was considered to create uncertainty in global financial markets, affecting commodity prices and exchange rates, which in turn influenced stock performance. The data were obtained from Barchart for oil and gold futures, Federal Reserve Economic Data (FRED) for DXY, and Yahoo Finance for adjusted closing stock prices. The sample consisted of 47 energy and materials companies in the S&P 500 with a total of 3,901 observations. Panel data regression with cluster-robust standard errors was employed to address potential heteroskedasticity and autocorrelation. The results showed that in the non-conflict period, oil returns and DXY had a positive and significant effect on stock returns, while gold returns were not significant. The Iran–Israel conflict did not have a direct effect on stock returns; however, it significantly weakened the effect of oil returns and reversed the effect of DXY from positive to negative during the conflict period, while gold returns remained insignificant.
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