The conflict in the Middle East has dramatically escalated, with Israeli forces striking the world’s largest gas field in Iran. Tehran swiftly retaliated, attacking the world’s largest liquefied natural gas (LNG) plant in Qatar. The strikes threaten to compromise up to 20% of global LNG supply, sending fresh shockwaves through energy markets and the broader economy.
In a surprising development, President Donald Trump laid blame on Israel for the escalation, stating he was unaware of the initial attack. The statement signals a potential rift in the critical U.S.-Israeli alliance at a time of extreme regional volatility.
The severe energy shock caused by the closure of the Strait of Hormuz and the latest strikes sent global equity markets tumbling. European and Asian stocks plunged by an average of 2%. Brent crude surged 7% to $114 a barrel, nearing levels that analysts warn could trigger significant economic disruption worldwide. U.S. equity futures point to modest falls at the open as President Trump called for de-escalation in the conflict.
Amidst the inflationary threat posed by soaring energy prices, the European Central Bank (ECB) is now widely expected to maintain its current interest rates.
In corporate news, HSBC Holdings Plc is reportedly assessing the potential impact of artificial intelligence on its workforce, with internal discussions indicating that up to 10% of its jobs could be at risk, according to Bloomberg sources.
Meanwhile, Union Bancaire Privée has made a strong bullish call on the Chinese Yuan, forecasting a potential decade-long rally and estimating the currency is currently undervalued by between 10% and 50% against major peers. Gold, traditionally a safe haven, was down 4,5% to 4700, while the U.S. dollar was stable against peers.