According to Tuesday's reports, the MSCI Asia-Pacific Index fell by as much as 2.5%, which is the worst result since April last year. South Korea's Kospi index – the world's second best-performing stock market this year – fell as much as 6.4%. after the weekend. U.S. and European stock index futures also fell, signaling further declines.
In recent days, investors have focused primarily on oil, whose prices have been rising due to the escalation of the conflict between the United States and Israel and Iran, as well as the threat of complete closure of the Strait of Hormuz – a key transport route for this raw material. The price of Brent crude oil increased by almost $80. per barrel after Monday's increase of over 7%. Rising oil prices have fueled concerns about the outlook for global bonds.
See also: The fear index shot up. We summarize the day on the WSE and stock exchanges in Europe
Investors predict what will happen next
According to Bloomberg, concerns about rising inflation have prompted investors to limit bets on interest rate cuts by the Federal Reserve. The first U.S. rate cut was fully priced in in September, and expectations for a third cut in 2026 are declining. The change comes as rich stock markets around the world are already volatile due to billions companies are investing in artificial intelligence and concerns about the technology's disruptive impact.
— In my opinion, the markets behaved last evening as if the conflict would be relatively short. But this approach may be too optimistic, Nick Ferres, chief investment officer of Vantage Point Asset Management in Singapore, told Bloomberg.
See also: War in the Middle East. The Polish stock exchange is in big negative territory
According to Ana Isabel Gonzalez Encinas, chief investment officer at Farringdon Asset Management, the key question for markets now is how long the conflict in the Middle East will last – this will show whether the market declines will prove to be a “short-term increase in risk premiums or a long-term shock” that will begin to weigh on investment and employment decisions.
