Global investors may be underpricing the impact of a conflict between Israel and Iran, market watchers warned on Monday, as stocks rallied despite escalating warfare in the Middle East. The two regional powers continued trading fire on Monday, marking the fourth consecutive day of fighting since Israel launched airstrikes against Iran last week.

Despite war jitters and foreign outflows, domestic markets held firm. With retail inflows steady and domestic themes strong, is the buy-the-dip playbook still the smartest move?

Sheth anticipates an extended conflict between Israel and Iran over the forthcoming weeks. He expects markets to maintain a calm demeanour, although they may remain cautious about potential US involvement.

The escalating tensions between Iran and Israel are also sending shockwaves through global stock markets, with India’s benchmark Sensex closing 573 points lower on Friday.

Iranian media report new Israeli attacks on the west of the country on Monday, after Iranian strikes broke through Israel's iron Dome defences overnight.

The ripple effect of the back-to-back strikes between Israel and Iran were seen in the U.S. stock market on Friday. CBS News MoneyWatch correspondent Kelly O'Grady has more.

President Donald Trump abruptly announced that he would leave the G7 summit a day early and return to Washington shortly after posting an ominous social media message that appeared to suggest more carnage in Iran.