Global Markets Reel Amid Escalating Iran Conflict and Stagflation Fears

Key Intelligence

• ■The escalating Iran conflict has triggered widespread market volatility, with traders shifting to 'stagflation trades' and comparing the shock to the initial phase of the Covid-19 pandemic.
• ■Oil prices have surged past $110 and European natural gas prices jumped 30%, driven by sustained Iranian strikes, output cuts from Gulf giants, and deepening supply shock fears.
• ■Global bond markets are experiencing a significant selloff due to rising oil prices and heightened inflation concerns, causing borrowers to delay new bond sales.
• ■Stock markets in Asia (e.g., Indonesia, South Korea) are plunging, and broader market momentum trades are undergoing a 'full-blown panic unwind'.
• ■Central banks like the ECB and BOE are facing increased pressure for rate hikes as soaring energy costs fuel inflation, with China also reporting increased inflation.