October 1, 2024, Tel Aviv, Israel: A missile launched from Iran appeared over Tel Aviv.
Ilya Yefimovich/dpa | Photo Alliance | Getty Images
Stephen Roach, a senior fellow at the Tsai Ing-wen China Center at Yale Law School, said the combination of conflict in the Middle East and rising unemployment in the United States puts the market at risk of a “big hit.”
Middle East conflict escalates on Tuesday Iran launches ballistic missile attack After Israel was killed Hezbollah leader Hassan Nasrallah and an iranian commander lebanon.
Most Asian markets fell on Wednesday, tracking losses on Wall Street overnight, as investors fretted about escalating tensions in the Middle East.
“Markets really don’t know where to turn,” Roach said, adding that conflict in the Middle East was exacerbating inflationary risks at a time when central banks around the world are starting to ease monetary policy.
“We may see a significant increase in volatility and the market will indeed move wildly,” Roach told CNBC.Squawk Box Asia” Wednesday.
oil market impact
The Israel Defense Forces said its forces had begun launching new strikes against Hezbollah targets in Lebanon in response to an Iranian missile strike late Tuesday.
It remains to be seen whether this will have a lasting impact on inflation, Santander chief economist Stephen Stanley said, adding that oil markets would be “more severely affected” if tensions escalated.
Iran is OPEC’s third-largest producer, producing nearly 4 million barrels of oil per day, according to the U.S. Energy Information Administration. Oil prices have jumped It rose by 5% after the missile attack and then gradually increased to 2%.
market fluctuations
Kelvin Tai, regional chief investment officer at UBS Global Wealth Management, said whether the market’s risk-off trend will last longer depends on several key factors, one of which is Israel’s response to the Iranian attack.
“If this was a measured response and not aimed at mass harm and killing… things in the Middle East might actually be resolved a little bit… You wouldn’t see a response to a regional war Fears are escalating in the Middle East,” he said.
At the same time, Roach said that the escalation of tensions in the Middle East poses upward risks to oil prices and inflation. “Central banks will definitely have to think twice before continuing to adopt further easing policies,” he told CNBC.
The Fed is expected to cut interest rates by another half percentage point at its next two policy meetings this year, according to its so-called dot plot. From the September meeting.
Traders are also eyeing Friday’s U.S. jobs data Get more indications on economic conditions following the introduction of the Reserve Bank’s policies Interest rates were cut significantly in September. A higher-than-expected unemployment rate may prompt the Fed to speed up its easing cycle to achieve a soft landing.
According to Reuters London Stock Exchange Group (LSEG) survey data, the unemployment rate in September is expected to be 4.2%, the same as in August. The unemployment rate has jumped to nearly A three-year high of 4.3% In July, it was up sharply from the five-decade low of 3.4% in April 2023.
Another factor that could drive further market volatility is how long the strike by longshoremen on the eastern U.S. and Gulf Coast will last, Tai said.
Longshoremen at ports from Maine to Texas move on mass strike Controversy over wages and the threat of automation. This is expected to disrupt global supply chains and has Nearly half of the country’s shipping operations have been suspendedReuters reported.
“Any disruption to ports, any shutdown of ports is going to have very significant economic consequences very quickly,” said Peter Tilswell of S&P Global Market Intelligence. “The longer this goes on,” he warned. The longer, the faster the economic losses will be installed. “
Correction: This article has been updated to correct a quote from Kelvin Tay, regional chief investment officer for UBS Global Wealth Management.
