Bloomberg News reported on the 29th (local time) that the war between Israel and Palestine is virtually taking on the appearance of an all-out war, with the Israeli army deploying ground forces into the Gaza Strip, and will have a significant impact on the international financial markets.
As Israeli ground forces are deployed to the Gaza Strip, Middle East stock markets are falling all at once, and representative safe assets such as the dollar, Swiss franc, yen, and euro are showing strength.
Even so, the international financial market was suffering from a surge in bond yields (market interest rates).
In this situation, Bloomberg predicted that if tensions rise in the Middle East, the international financial market is likely to suffer a huge blow.
If tensions in the Middle East increase, international oil prices may soar. A surge in oil prices could deal a fatal blow to the global economy, which is already under high inflation pressure.
The Middle East supplies about two-thirds of the world’s oil. West Texas Intermediate (WTI) futures surged 3.2% over the weekend to $85 per barrel.
As an all-out war virtually begins in the Middle East, oil prices are likely to fluctuate further in the future.
When the first oil crisis occurred in 1973, when the Israeli-Palestinian war broke out, oil-producing countries in the Middle East imposed an embargo on crude oil from the United States to retaliate against the United States for siding with Israel. As a result, oil prices soared, causing stagflation in the global economy.
Paul de la Baume, investment advisor at global investment bank BNP Paribas, predicted, “The market is facing a very difficult situation, and the Middle East conflict will further increase uncertainty and maximize volatility.”
Traders and strategists agree that safe assets such as gold, Swiss franc, dollar, and short-term government bonds will benefit in this situation.
Gold has been one of the biggest beneficiaries since the war began. Since the start of the 7-day war, the spot price of gold has surged more than 10%, exceeding $2,000.
In addition, representative safe assets such as the dollar, yen, euro, and Swiss franc are also showing strength.
Meanwhile, Israeli military spokesman Major General Daniel Hagari announced at a press conference the previous day that ground operations involving a limited number of infantry, armored, and engineering units and fighter jets had been expanded, indicating that the Israeli-Palestinian war is taking on the appearance of an all-out war.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.