Middle East Conflict Triggers Global Market Volatility, Yen Surges

Global markets are experiencing significant volatility due to rising war risks in the Middle East and a surge in the Japanese yen. The conflict has led to an increase in oil prices, with Brent crude futures reaching their highest level in six weeks at around $99 per barrel.

The yen has recorded its strongest gain in two years, rising nearly 4% over the past week. This is attributed to investors unwinding carry trades, which were used to fund investments in higher-yielding assets due to Japan's low interest rates.

Francesco Pesole, an ING strategist, noted that although short-term fundamentals suggest this move has gone too far, it remains risky to bet against the yen's appreciation, especially with further carry-trade unwinding possible.