Investors in global financial markets appear to be back on the sidelines. With crude oil prices still hovering above US$100 a barrel and the conflict in Iran showing no signs of abating, markets are now gripped by renewed concerns about the future of the global economy.
The latest on Tuesday, the yield on the 30-year US bond rose to its highest level since 2007.
The sharp rise came as investors worried that soaring energy costs would force the US Federal Reserve to raise interest rates, rather than lower them as previously expected.
Concerns about inflation and rising bond yields have dampened investors' appetite for risk. As a result, major stock and commodity markets have suffered:
S&P 500 Index: Down 0.7% as investors began to take a cautious approach.
Nasdaq 100 Index: Fell 0.6% due to pressure from hot US inflation figures and high oil prices.
Gold Price: As a non-yielding asset, gold failed to maintain its position and was now traded below US$4,500 an ounce yesterday.
US Dollar Currency: The US Dollar value is getting stronger as its index closed at its highest level in six weeks.
Not only in the US, bond markets in Europe and Japan were also reported to have experienced similar falls on Tuesday.
Trump Gives Strong Warning, NATO Ready to Intervene
From a geopolitical perspective, the situation is becoming increasingly tense when President Donald Trump threatened to Revive Attacks on Iran in the coming days.
This aggressive step was taken to force Tehran to immediately sign a peace agreement to end the war.
At the same time, the NATO military alliance is reportedly discussing the possibility of helping to escort merchant ships through the Strait of Hormuz.
This emergency measure will be taken if the waterway, which is very critical for the world's oil and gas supply, still fails to reopen by early July.
Putin Arrives in Beijing to Strengthen Relations
Meanwhile, in the Asian region, political developments also stole the spotlight when Russian President Vladimir Putin was reported to have safely arrived in Beijing late Tuesday night.
This official visit is aimed at further strengthening diplomatic and economic relations with Chinese leader Xi Jinping. Among the main agendas brought by Putin include resuming the mega energy project between the two countries which was previously reported to have been delayed for quite some time.
This week, the world financial market seems to be facing a "storm" of inflation and political tension.
For us in Malaysia, this development needs to be closely monitored because world oil prices and the strength of the US Dollar will directly affect the country's import costs as well as the value of the Ringgit currency in the daily market.
