Home Business and Economy Markets on High Alert Amid Escalation Fears: Israel-Hamas Tensions Spark Global Caution

Markets on High Alert Amid Escalation Fears: Israel-Hamas Tensions Spark Global Caution

Markets on High Alert Amid Escalation Fears: Israel-Hamas Tensions Spark Global Caution

LONDON Stocks Fall Amid Israel-Hamas War Tensions

European stock indexes fell on Monday as cautious markets monitored the escalation of the Israel-Hamas war. Oil prices pulled back from recent gains.

Israel’s Prime Minister Benjamin Netanyahu promised to “demolish Hamas” as troops prepared to enter Gaza in pursuit of the militant group responsible for the deadliest attack on civilians in Israeli history.

Last week, oil prices rose due to fears of escalation in the world’s top oil-producing region. Safe-haven assets like U.S. Treasuries and gold also saw an increase in demand.

Traders are watching closely for any indication that other countries may become involved in the conflict, which could drive oil prices even higher and negatively impact the global economy. Iran’s armed forces stated they will not engage militarily unless attacked by Israel.

As of 0823 GMT, the MSCI World Equity Index was down 0.2% on the day. Europe’s stock indexes, including the STOXX 600 and London’s FTSE 100, were also in the red.

After a surge last week, oil prices eased with Brent futures down 0.65% and U.S. West Texas Intermediate (WTI) crude falling 0.7%.

Analysts suggest that a de-escalation of tensions or involvement of oil-rich nations could improve market sentiment, while further comments from Iran will be closely monitored.

Top U.S. officials warned about the potential for the war to escalate into a broader conflict in the Middle East. Secretary of State Antony Blinken has been visiting various countries in the region to limit the spread of the conflict.

Hamas’ attack has shifted market sentiment away from the global economy and the Federal Reserve’s monetary policy, with geopolitical concerns taking precedence.

Benchmark 10-year U.S. Treasury yields edged up slightly, while European government bond yields rose following concerns expressed by European Central Bank officials about inflation. Germany’s 10-year yield increased by 4 basis points.

The U.S. dollar index slipped slightly, while the euro saw a modest gain.

Gold prices retreated by 1% after a significant increase on Friday, and Israel’s shekel sank to an eight-year low.

Analysts highlight that the risks associated with the Gaza conflict are most evident in gold and oil prices, but identifying potential flashpoints and scenarios remains challenging.

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