The impact on financial markets from the Israel-Hamas conflict

<p>The escalating conflict and humanitarian crisis in the Middle East is a reminder of the world’s fragility and our thoughts remain with those affected. It has not yet had a significant impact on global financial markets. The greatest vulnerability appears to be in the oil market, particularly if Iran becomes involved in the conflict.</p> <p>A strong response by Israel in Gaza could encourage Hezbollah to attack from the North or draw Iran into direct conflict. In turn, the US could impose sanctions on Iran, which may lead to a significant reduction in crude oil supply and upward pressure on global energy prices.</p> <p>However, these risks need to be set against an improving global macroeconomic situation. Inflation appears to be under control, which makes future interest rate rises less likely. At the same time, global growth forecasts are holding up.</p>