The global energy market is back on fire this morning as Brent crude oil prices jumped around 3 percent to $96 a barrel. This sharp rise came after Israel launched retaliatory airstrikes inside Iranian territory, dashing market hopes to see the vital Strait of Hormuz trade route reopened in the near future.
Despite the latest alarming news, US President Donald Trump insisted that this military upheaval will not affect peace talks between Washington and Tehran.
However, investor sentiment on the stock exchange roof seems to be more confident in reality on the ground than in political statements.
Employment Data Slaps Stock Market
The financial market atmosphere has actually been tense since the end of last week following the US employment data report that came out much stronger than expected. The addition of 172,000 new jobs prompted investors to bet that the Fed may have to raise interest rates to tame inflation.
Following the Fed's hawkish signals, the Nasdaq index and global technology sector stocks experienced a sharp drop, sparking panic. Asian stock markets plunged sharply this morning, while the VIX volatility index surged to 21, reflecting fears that fund managers are beginning to reduce their portfolio risk.
US Dollar Strikes Again
On the currency front, the US Dollar bared its teeth by pressing other major currencies, sending the EUR USD pair tumbling towards 1.15. The Greenback's strengthening was driven by a surge in the US two-year Treasury yield, which is currently at around 4.19 percent.
Europe Caught in a Signal of Failure
Moving to the European continent, the economic bloc received a double blow when the latest revised data showed the Eurozone economy shrank by 0.2 percent in the first quarter. Investors are now turning their full attention to the European Central Bank or ECB meeting on Thursday, which is expected to raise interest rates by 25 basis points.
