Tensions in the Middle East, especially the recent Israel-Hamas tension, continue to directly affect global markets. The uncertainty created by the tension, the possibility of other countries getting involved, and the statements from the United States are leading investors to invest in gold and oil.
Another significant development drawing attention is the recent statements by Fed Chairman Jerome Powell. In his speech at the New York Economic Club, Powell indicated that the strong performance of the U.S. economy might still necessitate an interest rate hike. While noting that they adopt a cautious approach to interest rate policy, Powell expressed that they would carefully examine economic data when making interest rate decisions.
Expectations of Decline in Asian Markets
On the other hand, Asian markets are going through a turbulent period. The MSCI Asia Pacific Index is heading towards its biggest decline in the last two months. China’s CSI 300 is down 0.22%. Japan and Hong Kong stock markets are also in a downward trend. Wall Street’s futures trading continues its losses.
Bond Yields Retract Following Powell’s Speech, While the Situation in Oil and Gold Is the Opposite
There’s also movement in the U.S. bond yields. Shortly after Powell’s speech, 2-year U.S. bond yields retreated, and there was also a decline in 10-year bonds, but it is still close to the critical 5% level.
The rising trend in oil and gold is directly linked to the tension in the Middle East. Brent crude is trading above 93 dollars, marking four consecutive days of gains. Gold also increased its value by 3% in the last four trading days.
In summary, in global markets, the economic indicators, along with the rising tension in the Middle East, continue to bring about fluctuations. It’s unknown how much higher oil and gold will go, but some analysts, speculating on the prolonged effects of the conflict, are expecting a rise of around 5 dollars in oil prices.