Global stock markets, which experienced a rollercoaster ride in the early days of the war with Iran that began on February 28, are now approaching developments more calmly. Stock markets have experienced a rapid recovery since the beginning of April, with many reaching historical highs. Following the US and Israeli attack on Iran on February 28, markets worldwide have been preoccupied with the war. In the initial days of the war, uncertainty about the future caused sharp price movements in the markets. Markets reacted very strongly in both directions to statements made by US President Donald Trump. However, a month after the start of the war, markets began to act more cautiously. For example, last Friday saw critical news flows that increased hopes for peace. Following Trump's statements that Israel would not attack Lebanon, Iranian officials announced the opening of the Strait of Hormuz. This news accelerated rises in stock markets, while oil prices quickly retreated. However, things reversed over the weekend, and the Strait of Hormuz was closed again.
Stock markets, which started last week in this environment, did not experience the panic seen in the early days of the war, despite oil prices rising back above $100. In fact, many stock markets reached historical highs. On Wall Street, the S&P 500 Index continued its uninterrupted rise for the last 17 trading days, and Trump frequently referred to the performance of the stock markets in his statements last week. It is said that the markets, having overcome the initial shock of the war, are pricing in the expectation that a lasting peace agreement will eventually be signed.
Looking at the performance of major stock market indices this year, it is clear that they have left the negative impact of the war behind. The South Korean stock market has seen a year-to-date increase of over 50%, while the Taiwanese stock market has risen 34.42% since the beginning of the year. This week, markets will continue to monitor developments in the Middle East. The repercussions of the attempted attack on the White House, while the US delegation decided against going to Islamabad for the second round of talks at the last minute, will be followed. Global markets this week are focused on the interest rate decisions of central banks in the US, Eurozone, Japan, and the UK. The US Federal Reserve (Fed) is widely expected to keep its policy interest rate unchanged at 3.50-3.75% this week.
Rising energy costs due to conflicts in the Middle East are raising concerns about increased inflationary pressures globally. The Bank of Canada, which will announce its monetary policy decisions on the same day as the Fed's rate decision, is also expected to keep its policy rate at 2.25%. In money markets, the European Central Bank (ECB) is expected to keep its three key policy rates unchanged, while the Bank of England (BoE) is also projected to leave its rate unchanged. In Japan, the Bank of Japan (BoJ) is expected to keep its policy rate at 0.75% due to increased uncertainty regarding the economic and inflation outlook.
