Asian shares plunge over 2% amid rising Middle East tensions
Asian shares experienced a significant plunge of over 2% as tensions rose in the Middle East, according to MSCI’s broadest index of Asia-Pacific shares. This was in response to reported Israeli missile attacks on Iranian sites, which also caused US stock futures to drop by 1.3%.
The escalation in hostilities has driven the bond yields to tumble, with US long-term Treasury yields seeing a decrease of 13.5 basis points. They are now sitting at 4.512%. As investors sought refuge in safe havens, the US dollar index and the yen witnessed increases of 0.14% and 0.4% against the dollar, respectively.
Amidst the turmoil, gold prices soared by 1.6%, reaching US$2,414.69. This rise has brought it closer to the all-time high recorded last week at US$2,431.29. Kyle Rodda, an analyst at Capital.com, attributed the market’s reaction to fears of an Israeli retaliation.
In addition to the volatility in the share and bond markets, oil prices experienced a surge of US$3 per barrel. These fluctuations stem from concerns about potential disruptions to the supply from the Middle East, following the reports of Israeli missile attacks, reported Bangkok Post.
Earlier this week, Israeli Prime Minister Benjamin Netanyahu had threatened retaliation after Iran launched a series of attacks over the weekend. Market participants are now anxiously waiting for further developments to unfold in this escalating situation.
In related news, tensions in the Middle East and ongoing conflicts between Russia and Ukraine have elevated crude oil prices. Notwithstanding the fragile global economic climate, crude oil prices experienced a dip in the first quarter of the year, as the OPEC+ group of producers continued to restrict supply.
Near the start of April 2024, the ICE Brent crude oil price has reached its peak in almost five months, inching towards US$90 per barrel. This is a significant improvement from the first quarter of 2024 when it stood at US$81.7 per barrel. Nevertheless, the market remains apprehensive about the fragile global economic outlook.
