Markets pulled back from record highs as escalating tensions between the US and Iran unsettled investors.
Asian equities slipped and Wall Street edged lower after a surge in oil prices — with Brent crude briefly jumping above $115 a barrel — raising concerns about inflation and economic growth. The dollar strengthened as a safe haven, while trading volumes remained thin due to regional holidays.
The renewed conflict threatens to reintroduce volatility after a strong rally in global equities driven by robust tech earnings. Headlines noting that “two missiles hit a US warship near Jask Island after it ignored Iran’s warnings” spurred volatility, while US Admiral Cooper stated that the US has opened a passage in Hormuz for free transit.
Ongoing attacks and military posturing in the region have heightened geopolitical risks, with implications for energy markets, inflation, and central bank policy. Analysts warn that even if tensions cool, the economic aftereffects — particularly higher energy costs and risk premiums — may linger.
Meanwhile, mixed signals across asset classes reflected cautious sentiment: gold ticked higher, bond yields rose amid inflation fears, and currencies and equities showed uneven reactions as markets assessed the broader impact.
The RBA raised rates from 4.10% to 4.35%, as expected. We have ISM Services PMI and JOLTS Job Openings scheduled later today.
