As the air war continues to escalate, with reports of damage to the U.S. embassy in Riyadh and to Amazon (AMZN.O), opens new tab data centers in the UAE and Bahrain, the safe-haven status of Gulf cities like Dubai has been called into question like never before.
That underlines the inherent risks of the widening conflict, not just for the Middle East but for the broader global economy, raising all sorts of implications including a potential spike in inflation not to mention the telling impact on investor confidence and growth.
Energy prices continue to rise, with crude up for a third day after Iran threatened to fire upon ships trying to pass through the Strait of Hormuz. Brent crude rose 2.5% to $79.64 as the cost of hiring a supertanker to ship oil from the Middle East to China surged to an all-time high of over $400,000 a day, LSEG data showed.
The U.S. will take action to mitigate rising energy prices, Secretary of State Rubio said, with plans set to be announced later on Tuesday.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was down 2.3%, led by a drop of as much as 6.5% in Korean shares, while S&P 500 e-mini futures slid 0.8% and Nasdaq e-mini futures fell 0.9%.
The U.S. dollar index , which measures the greenback's strength against a basket of six major peers, held close to a six-week high at 98.622 as the Iran strikes rattle market nerves and the currency regained some of its allure as a safe haven.
Japanese Finance Minister Satsuki Katayama put currency markets on notice, suggesting that intervention remains an option to defend the yen which came under more selling pressure in the wake of the Middle East crisis.
The yield on the U.S. 10-year Treasury bond was up 0.4 basis point at 4.054%, while gold advanced 0.6% to $5,359.93.
In early European trades, pan-region futures were down 0.9%, German DAX futures fell 1%, and FTSE futures slipped 0.3%.
