Market participants say repercussions from the conflict risk exacerbating several trends.
NEW YORK: Fears of a widening conflict in the Middle East are threatening more volatility for investors after a painful stretch in US markets.
The S&P 500 reversed earlier losses and was recently up 0.5%, while Brent crude was up around 4% to US$88.10 per barrel. Prices for gold, a popular destination for investors during uncertain times, were up 1.2% at US$1,854.10 per ounce. Market participants said repercussions from the conflict risked exacerbating several trends that have weighed on risk assets in recent months. Among those is the potential of a rebound in oil prices that could weigh on US economic growth and endanger the so-called soft landing narrative that has helped boost stocks this year.
A widening conflict could keep oil prices elevated and potentially bolster inflation, she said. That could complicate the picture for the Federal Reserve and other global policymakers, who have been seeking to tamp down consumer prices after last year’s surge. “I think this is just an extra source of concerns and the timing is not ideal, because the commodity market is already quite stretched, the bond market is quite stretched,” said Emmanuel Cau, Barclays head of European equity strategy.
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