🗞️ Middle East Conflict Continues — Markets Enter “War Mode”
🌍 Market Theme“War × Inflation × Volatility”
This week, military conflict between the United States–Israel alliance and Iran continues to intensify, with tensions spreading across the Middle East.
In addition:
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Growing risk of a closure of the Strait of Hormuz
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Sharp surge in oil prices
These developments are raising concerns about the global economic impact.
If the conflict becomes prolonged, it could simultaneously lead to:
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Global inflation pressures
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Supply chain disruptions
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Economic slowdown
🛢 Middle East Developments
Yesterday, markets reacted sharply to a New York Times report stating that:
Iran had proposed negotiations regarding conditions for ending the war.
This triggered:
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A sharp rebound in equity markets
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A temporary reversal of risk-off positioning
However, shortly afterward:
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Military attacks continued
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The United States warned of “a much larger wave” ahead
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Iran signaled its determination to continue fighting
As a result:
👉 Safe-haven demand for the US dollar has resurfaced.
Additionally:
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Iran’s Revolutionary Guard reportedly attacked a U.S. tanker
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Iran claims to have control over traffic in the Strait of Hormuz
These developments have further escalated tensions.
📉 Market Behavior
A common pattern during major geopolitical events is:
“Overreaction → Reversal → Renewed risk aversion.”
Typically:
1️⃣ Initial panic reaction
2️⃣ Short-term position unwind
3️⃣ Risk-off flows return
The current market environment is characterized by:
👉 Sharp declines and rapid rebounds
In other words, a high-volatility phase.
💱 Foreign Exchange Market
The core structure remains:
Safe-haven demand for the US dollar
However, several forces are interacting simultaneously:
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Short-term speculative position adjustments
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Hedging flows
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Rebounds in risk assets
This makes the market directionally unstable.
The key is to distinguish between:
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Depth of pullbacks
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Timeframe of trends
📊 Key Economic Data Today
Europe
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Sweden CPI
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France Industrial Production
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Eurozone Retail Sales
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UK Construction PMI
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Switzerland Employment Data
United States
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Challenger Job Cuts
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Initial Jobless Claims
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Labor Productivity
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Import / Export Price Index
The most important release:
Initial Jobless Claims
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Forecast: 215K
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Previous: 212K
This serves as a leading indicator ahead of tomorrow’s U.S. Non-Farm Payrolls.
🎙 Central Bank Speakers
Several officials from the European Central Bank will speak today:
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Christine Lagarde
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Luis de Guindos
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Joachim Nagel
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Olli Rehn
In addition, the ECB meeting minutes (February meeting) will be released.
🧭 Summary
Markets are currently operating in “war mode.”
Key themes include:
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Safe-haven USD buying
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Rising oil prices
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Inflation concerns
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Risk-off sentiment in equities
However, because overreactions and reversals occur simultaneously, the market environment is likely to remain:
Highly volatile and extremely sensitive
Going forward, headlines related to Middle East developments will remain the most important driver of markets.
