Post Iran's attack on military bases housing US troops in Iraq, US President Donald Trump did not directly threaten military action but said the United States "will immediately impose additional punishing economic sanctions on the Iranian regime."

Analysing this response from the US and its impact on the global markets, Richard Harris, chief executive at Port Shelter Investment Management said, “I don’t think anybody really wants a war. The Iranians obviously are behind the game compared to the Americans militarily. The Americans are operating 1000 of miles from their home bases. So, I am not surprised that people want to step back a little,” said Harris in an interview with CNBC-TV18.

He further said that Trump's imposition of additional sanctions on Iran won't be much different because the countries are already under severe sanctions.

Talking about his outlook for emerging markets, Harris said, “EMs are also very much dependent on the news that we are getting from overseas. So we are seeing strong positivity from markets around the world, and I do not see that easing for a while. There is a lot of talk about equity buybacks, cheap interest rates, further liquidity both by central banks and governments, and while that is going to happen, the bubble is going to continue.”

“Although it might be a dangerous stage at the moment, to try and catch-up on what one has lost last year, i think the markets would go ahead but there are plenty of reasons to be prudent,” he added. According to him, India ranks highly among the EM basket.

Talking about the impact of these latest developments on the commodity markets, Mriganka Jaipuriyar, head of news at S&P Global Platts said, "In the near-term, we are going to see volatility in crude, there is still a lot of uncertainty. We have to be careful not to underestimate sentiment in Iran and the US President’s unpredictability. This is going to keep the markets on tenterhooks and it’s going to keep prices volatile.”

“Our expectation is for Brent crude prices to be capped in the high USD 60/bbl because fundamentally, this is a low demand season,” she added.

We could see supply coming back from Organisation of the Petroleum Exporting Countries (OPEC), in case there is any of supply disruption, said Jaipuriyar.

“Fundamentally the market is a bit weak at the moment. In terms of heightened risk in the Middle East, should there be some sort of disruption in Strait of Hormuz then that would be a significant disruption and it would be difficult to replace that level of disruption,” Jaipuriyar added.

According to her, crude has been unable to sustain above USD 70/bbl because there has not been a supply disruption.