Missiles, oil prices and further geopolitical tensions dominated the headlines as the Middle East conflict entered Day 17 with the timeline for the war becoming increasingly uncertain. United States President, Donald Trump initially suggested a 4-5-week timeline and supported that on Monday night ensuring that they are “very close to finishing” their military operations. However, only the day before US Defense Secretary Pete Hegseth stated that “this is only just the beginning”.
With uncertainty looming, global markets extended its losses for the third week in a row with the S&P 500 recording a 1.6% loss. Both the Dow and the Nasdaq fell 2% and 1.3% respectively for the week. As global markets continue to fall, Wall Street is bracing for a Stagflationary environment of higher inflation and slower economic growth. Despite positive earnings, investor sentiment continues to struggle as uncertainty around the war and supply issues persist.
For Australia there are the same economic impacts with major issues surrounding oil supply shortages affecting major sectors such as export, supply chain distribution, aviation and other related industries. With higher freight and supply chain issues, consumers will eventually bear the cost.
With the cost of oil surging, Australians are already seeing the everyday impact with petrol prices jumping 50c on average since the start of the war. Australians looking to book flights are expected to see a 5% rise after jet fuel rose 150% over the past fortnight.
With no end in sight, the Middle East conflict is expected to keep pressure on the global economy, with higher energy prices, rising costs and slower growth likely to weigh on Australia and the world.
