According to Bloomberg, investors are temporarily staying out of the market and waiting for clearer developments.
Chinese stocks were mixed between gains and losses. European stock futures were slightly lower. The dollar was little changed, while gold prices remained near record highs.
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Oil prices surge as Israel-Iran conflict escalates. Photo: Bloomberg |
Brent crude oil prices jumped 5.5% in the first trading session on June 15, but then quickly reversed and almost lost all of the previous gains. This strong fluctuation showed the cautious sentiment of investors when considering the risk of escalating conflicts in the Middle East and domestic economic signals. In the afternoon trading session of the same day, oil prices only inched up, up less than 1%.
What investors are now wondering is whether the conflict can be contained, following attacks from both sides and Israeli Prime Minister Benjamin Netanyahu’s tough statement that he will “strike every location and target.” The biggest concern now is the risk of disruption to oil supplies, which could lead to higher inflation at a time when many central banks are struggling to boost economic growth.
However, the market has not yet fully entered a state of “risk aversion”. US government bond yields along with some bonds in Asia have risen simultaneously - a sign that money has not yet rushed to safe-haven assets. The stock market has also seen bright spots. Japan's Nikkei 225 index rose 1.1%, while South Korea's Kospi index is approaching its highest closing level since January 2022.
Market analyst Tim Waterer of KCM Trade said that given the level of uncertainty surrounding the Israel-Iran conflict, the market is showing surprising developments.
The Israeli shekel recovered more than 1% against the dollar, ending a four-session losing streak.
Escalating tensions in the Middle East are adding to an already volatile global economic picture as markets enter an eventful week. The Federal Reserve and the Bank of Japan are among the central banks set to announce interest rate decisions, while developments surrounding the Group of Seven meeting are also expected to add to volatility.
In Japan, defense stocks surged after reports that Tokyo and the European Union are expected to hold a meeting to promote cooperation in the defense industry.
Meanwhile, China’s retail sales rose 6.4% in May, beating expectations for a 4.9% increase. This was part of a series of new economic data from the world’s second-largest economy – although the overall picture was mixed. However, the unexpectedly positive results helped improve investor sentiment, helping the Chinese stock market in Hong Kong recover from an early decline.
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