Crude oil remains above $90 per barrel as anxiety over escalating violence in Gaza continues to impact global markets. Equities have taken a hit, with Japan’s Nikkei average falling by 2% and Hong Kong’s Hang Seng slipping by 0.43%. Israel’s shekel has reached its lowest point in over eight years following Prime Minister Benjamin Netanyahu’s promise to “demolish Hamas” in retaliation for the recent attack that claimed the lives of 1,300 people. U.S. Secretary of State Antony Blinken is currently visiting the region in an effort to prevent further escalation.
In response to the crisis, Brent crude futures reached a recent high of $91.20 before trading slightly below $91 on Monday, after experiencing a 5.7% surge on Friday. This volatile market continues to be affected by the ongoing violence.
To address the situation, Netanyahu has agreed to lift a blockade of water supplies to parts of southern Gaza after a conversation with U.S. President Joe Biden. While this development offers a glimmer of hope, the situation remains highly unpredictable.
The global stock market has responded to the escalating conflict. On Friday, the pan-European STOXX 600 index lost nearly 1%, and New York’s S&P 500 declined by 0.5%. However, U.S. stock futures are pointing towards a 0.2% increase on Monday.
Chris Weston, head of research at Pepperstone, remains cautious about the market’s response, stating, “The situation is dynamic and it’s too early to say if the hedges placed on Friday are unwarranted, but there have been pockets of positive news flow.”
The impact of the conflict is also being felt in currency markets. The U.S. dollar index has slightly eased to 106.51 from its high of 106.79 on Friday. The euro, on the other hand, has risen by 0.14% to $1.05255, while the yen remains relatively stable at 149.445 per dollar.
Gold prices have also seen fluctuations in response to the conflict. After a significant gain on Friday, gold has retreated by 0.6% to $1,919.29 per ounce. Analysts emphasize that gold and oil prices are the most sensitive indicators of the risks associated with the Gaza conflict.
Overall, the situation remains highly uncertain, and analysts find it challenging to identify potential flashpoints and predict future scenarios. The global community continues to monitor the situation closely, with hopes for a peaceful resolution to the conflict.
Kevin Buckland in Tokyo has contributed to this report.
(Editing by Lincoln Feast and Sam Holmes)