Israel-Hamas Conflict Causes Global Market Fluctuations, Including Cryptocurrencies
The recent escalation of the Israel-Hamas conflict has had a significant impact on global financial markets, including cryptocurrencies. As tensions rise, stocks and cryptocurrencies have experienced a downward trend, while the value of oil and precious metals has increased.
This conflict comes at a time when markets are already facing challenges due to concerns about the Ukraine-Russia conflict, surging inflation rates, and rising interest rates.
Global Equities Decline Amid Israel-Hamas War
Major U.S. stock indices such as the S&P 500, Dow Jones, Nasdaq, and Wilshire 5000 saw declines following the outbreak of the Israel-Hamas war. The situation turned unfavorable after a positive close last Friday.
In response to the crisis, the Bank of Israel announced plans to sell up to $30 billion in foreign currency to maintain market stability. Israeli government bonds also dropped, with the 2120 Hundred Year bond hitting a record low.
Commodities Rally as Oil and Metals Increase in Value
During times of geopolitical unrest, oil and precious metals have traditionally acted as safe havens. This trend continues during the Israel-Hamas conflict. Both U.S. crude oil and Brent saw significant increases in value.
OPEC has recently raised its output projections, but discussions are underway about scaling back oil production due to the escalating conflict. If other countries get involved in the war, global oil supply chains could be impacted, further driving up prices.
Crypto Market Shrinks Amid Turmoil
Contrary to their reputation as “digital gold,” cryptocurrencies have not performed well during the Israel-Hamas conflict. The total market cap of cryptocurrencies decreased by 2.04%, with major cryptocurrencies like Bitcoin and Ethereum also experiencing declines against the U.S. dollar.
Geopolitical strategist Tina Fordham noted that emerging markets, commodities, and currencies are typically the most sensitive to geopolitical risk, and all of these areas have been affected by the conflict.
Hot Take: The Israel-Hamas Conflict Highlights the Sensitivity of Global Financial Markets
The ongoing Israel-Hamas conflict serves as a reminder of how global financial markets are sensitive to geopolitical events. While the immediate impact is evident across various asset classes, the long-term effects remain uncertain.
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