Global financial markets experienced fresh volatility on Tuesday, as investors reacted to the escalating conflict between Israel and Iran and its implications for energy supply and geopolitical stability.
Brent crude rose by 0.7% to nearly US $73 per barrel, amid concerns about shipping disruptions in the Strait of Hormuz, a vital conduit for global oil exports.
Futures for the S&P 500 and Dow Jones Industrial Average dropped by approximately 0.4%, while European equities saw sharper declines of up to 0.7%.
There was a marked uptick in demand for traditional safe-haven assets, including gold and U.S. Treasuries, signalling rising investor anxiety.
The Japanese yen and Swiss franc both appreciated modestly, reflecting their traditional status as safe currencies in times of uncertainty.
The Bank of Japan opted to maintain its benchmark interest rate, citing fragile economic recovery and the need for stability amidst global uncertainty. Meanwhile, the European Central Bank and the Federal Reserve are expected to issue cautious guidance in upcoming policy announcements.
Economists warn that prolonged instability in the Middle East could trigger stagflationary pressures worldwide, particularly if oil prices continue to climb. Sectors such as aviation, manufacturing, and agriculture may face heightened cost burdens.
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