The volatility is being fueled by a dramatic spike in energy prices, with Brent crude hitting $90 a barrel following disruptions in the Strait of Hormuz. As shipping halts and analysts warn that oil could reach $150 a barrel if Gulf exports are fully suspended, airline stocks have plummeted nearly 13% this week.
Qatar’s recent warnings regarding prolonged delivery delays for natural gas have only added to the “stagflation” fears, a situation where growth slows while prices rise.
Despite the downturn, US markets have shown more resilience than their global counterparts, buoyed by a strong tech sector and the nation’s status as a net oil exporter.
In contrast, European markets suffered their worst week in nearly a year, with the STOXX 600 hitting a two-month low. Because Europe is more vulnerable to energy price shocks, major exchanges in Frankfurt, Paris, and Madrid recorded historic weekly losses as investors braced for a potential stagflationary environment across the continent.
Gold prices edged higher on Friday as escalating tensions in the Middle East sparked a wave of safe-haven buying.
Spot gold rose 0.3% to $5,090.16 per ounce, while US gold futures for April delivery climbed 0.4% to $5,099.50. Despite these daily gains, the metal remained on track for a 3.5% weekly decline, effectively snapping a four-week winning streak.
This downward pressure stemmed from persistent inflation worries and a volatile dollar, both of which have dampened investor expectations for imminent interest rate cuts.
