Stocks Retreat Amid Gaza Risks as Oil Hovers Above $90
Risk Factors Weigh on Global Market
The global market faced a downturn as equities slid and oil prices remained above $90 a barrel. The prevailing anxiety stemmed from escalating violence in Gaza and concerns that the conflict could spread throughout the region beyond Israel and Hamas. The situation has prompted investors to seek safe-haven assets, leading to a firm dollar and a decline in stock values.
Israel’s Response and Diplomatic Efforts
Israel’s prime minister, Benjamin Netanyahu, vowed to retaliate against Hamas, causing the country’s shekel to sink to its lowest level in over eight years. U.S. Secretary of State Antony Blinken visited the region to prevent further escalation, resulting in Netanyahu agreeing to lift a blockade of water supplies to parts of southern Gaza after discussions with U.S. President Joe Biden.
Oil Futures and Market Turbulence
The price of oil futures reached a recent high of $91.20 before stabilizing just below $91. This followed a substantial surge of 5.7% on Friday. The volatility in energy markets has contributed to a decline in the Japanese share average and Hong Kong’s market. Additionally, mainland blue chips and Australia’s market experienced drops, while New Zealand’s equity benchmark slid by about 1%. However, U.S. stock futures indicated a slight improvement on Monday.
Positive Developments Amidst Uncertainty
Despite the prevailing uncertainty, there have been positive developments. Israel’s decision to resume water supplies to certain areas in southern Gaza is one such example. These pockets of positive news, albeit small, have the potential to impact risk and energy markets. Market participants will closely monitor the statements and actions of Iranian officials, who have expressed their obligation to assist the Palestinians.
Currencies and Treasury Yields
Currency markets experienced some retracement, with the dollar easing slightly against the yen. The euro also saw a modest increase. The shekel, however, weakened significantly against the dollar before rebounding slightly. Meanwhile, benchmark 10-year U.S. Treasury yields experienced a slight increase after a decline on Friday, as investors sought the safety of bonds.
Gold Prices and Conflict Risks
Gold prices retreated slightly after a significant gain on Friday. The conflict in Gaza poses risks that significantly impact both gold and oil prices. However, identifying potential flashpoints and predicting scenarios remains challenging.
Final Thoughts
The global market continues to grapple with the mounting risks associated with the Gaza conflict. While some positive developments have emerged, the situation remains highly uncertain. Market participants will closely monitor geopolitical events and their impact on various sectors.
