Global Markets Plummet Amid Middle East Tensions, Yen Surges
The global markets took a hit on Tuesday as tensions in the Middle East escalated. The Dow Jones Industrial Average dropped 1.21% in the first hour, while the S&P 500 fell 0.49% and the Nasdaq Composite lost 0.52%. The Brent crude oil price surged to $98.28 per barrel, its highest level in six weeks, after Yemen's Iranian-backed Houthis attacked energy facilities and cities in Saudi Arabia.
The attacks highlighted the risk of the conflict spreading throughout the region and further complicating fuel supply to world markets. A resurgence in inflation has also been weighing on the equity market, driven by a surge in bond yields to multi-year highs, which puts central banks under pressure to raise interest rates.
The European Central Bank is expected to raise euro zone rates by a quarter point on Thursday this week, while the chances of the Bank of Japan doing the same next week are intensifying. This has set the yen on course for its strongest rally in two years, with traders unwinding their carry trades.