War exploded across the Middle East over the weekend, following the US/Israeli attack on Iran. This is set to continue and escalate and will drive markets. We can expect commodity prices to surge, especially oil and gold, as Iran closes the Strait of Hormuz. Prior to the war, markets had closed out a volatile week, with equities suffering, closing out sharply lower on Friday. The underlying negative sentiment appears to be coming from AI and the impact it will have on many sectors of the economy. The US Dollar was weaker, despite fears of a spike in US inflation, not reflected in bond markets as the 10-year fell below 4%. The EUR regained 1.1800, while the GBP eased back, to trade back below 1.3500.The softer reserve allowed the AUD to regain 0.7100, while the NZD attempted to recapture 0.6000. The war in the Middle East will dominate markets in the coming week. Oil will be the focus but expect extreme volatility in commodity, currency and equity markets.
