Stock Exchanges and Bonds Lose Value Due to Escalation of Conflict in Iran

The global financial system is grappling with the most serious shock in months, caused by direct military involvement in Iran. Energy prices have surged sharply, which immediately translated into investment sentiment in Europe and the USA. The British stock index recorded the strongest devaluation in nearly a year, and the costs of servicing public debt in the UK jumped to alarming levels. The market fears that the conflict will permanently disrupt the hitherto stable return of inflation to targets set by central banks. This situation calls into question the previously expected monetary policy easing, and some representatives of the Federal Reserve already suggest that further rate cuts depend on progress in fighting high prices. The Middle East, including Iran, which is crucial for oil transportation, has been the epicenter of supply shocks for decades. The crises of the 1970s proved that instability in this region can permanently raise global living costs and lead to stagflation.The impact of the war is particularly visible in the aviation sector, where mass flight cancellations have hit airline stock prices. Despite this, Ryanair CEO Michael O'Leary points to an unexpected increase in bookings for the Easter period to continental Europe, resulting from tourists avoiding Middle Eastern destinations. Meanwhile, in commodity markets, we are observing an unusual situation: gold, traditionally considered a safe haven, is losing value under pressure from an exceptionally strong dollar and rising bond yields. Investors now prefer cash and the American currency over the precious metal, which reflects the scale of market panic and the search for liquidity. 1.9% — inflation in the euro zone unexpectedly was in FebruaryThe geopolitical situation forces rigorous actions not only in Europe. Financial markets in the United Arab Emirates, temporarily closed due to the crisis, are set to resume trading on March 4, which will be a test of the regional economy's resilience. Meanwhile, in South Africa, market players are beginning to price in an interest rate hike as early as this month, and the Bank of Japan is considering how the situation in Iran will affect its policy of moving away from negative rates. JPMorgan analysts are trying to pick out investment opportunities, claiming that the sell-off of European bank stocks is exaggerated, but the dominant trend remains a flight from risk. The future of global growth now depends on the permeability of trade routes and the persistence of the oil shock. „More rate cuts hinge on inflation progress.” — John Williams

Perspektywy mediów: Liberal media emphasize the destructive impact of the war on economic growth and advocate for caution by central banks to avoid causing a recession. Conservative media focus on the inflationary threat and the need to curb government expansion in the face of rising energy costs.