U.S.-Israel Attack on Iran Intensifies Global Market Volatility

Affected by the US-Israel attack on Iran, global capital markets showed mixed reactions at the opening of the new trading week: international oil prices rose significantly, precious metals fluctuated with an upward trend, while currencies such as the euro and Australian dollar fell against the US dollar.

Iran controls the Strait of Hormuz, a critical global energy transportation route. As Iran announced a ban on any vessels passing through the strait, the international market faces the risk of disrupted crude oil supply. International crude oil futures prices surged significantly on March 1. As of Eastern Time on March 1, the price of light crude oil futures for April delivery on the New York Mercantile Exchange once rose to $75.33 per barrel, up 12.4% from the previous trading day's closing price; the price of Brent crude oil futures for May delivery in London once climbed to $82.37 per barrel, a 13% increase from the previous trading day's close.

Some market analysts predict that if all traffic through the Strait of Hormuz is severely and prolonged disrupted, it could push oil prices above $100 per barrel.

Anticipating an escalation in US-Iran tensions, the precious metals market had already priced in risk expectations on February 27, driven by safe-haven demand, with gold and silver closing prices rising sharply that day. At the opening of the new trading week on March 1 Eastern Time, the April gold futures price on the New York Mercantile Exchange broke through $5,300 per ounce, briefly touching $5,409 per ounce during the session, a gain of over 2%, while the May silver futures price surpassed $94 per ounce.

Some market analysts forecast that if the situation further escalates, gold prices could reach $5,500 to $6,000 per ounce. Some predictions suggest that if the conflict continues to spread and triggers broader regional turmoil, gold prices might climb to $8,000 to $8,500 per ounce. The geopolitical environment has elevated gold from a portfolio diversification tool to a crucial risk management instrument.

In terms of exchange rates, the yen fell against the US dollar on the 2nd due to concerns that rising oil prices would intensify pressure on the yen's depreciation. Additionally, during the Asian early trading session, the euro dropped by 0.3% against the US dollar, the Australian dollar fell by 1.2%, and the New Zealand dollar declined by 2%.

Japan is highly dependent on imported energy. As investors worry that rising energy prices could lead to deteriorating corporate performance and sluggish consumption, the Nikkei 225 Stock Average on the Tokyo stock market fell by over 1,500 points shortly after opening on the 2nd. By the midday close, the Nikkei index was down 1.53% at 57,950.76 points.