Can markets resist geopolitical shock?

The recent escalation in the Middle East continued to weigh heavily on markets on Friday. It marked the 3rd consecutive week of decline for global stocks, while Brent remained above $108 per barrel.

Wall Street saw a significant drop at midday, fueled by rising energy prices and growing risk aversion, even as oil stocks continued to outperform. Investors appeared to be waiting for a sign of easing tensions before returning to risky assets.

Towards a tightening of central banks?

Bond yields rose, reflecting revived inflation expectations due to the surge in oil prices. The US 10-year yield surpassed 4.37%, while markets now consider scenarios where the Fed or the ECB could delay or even suspend planned rate cuts. The BoE and the ECB are seen as more likely to raise rates in the spring. Central banks remain on high alert as geopolitical tensions threaten energy prices.