Global Markets Enter Q2 Facing Oil and Geopolitical Risks
Markets enter the second quarter facing high oil prices and geopolitical risks. Investors expect persistent inflation to delay rate cuts as equities retreat.
Financial markets are entering the second quarter under significant pressure from geopolitical conflict, a backdrop that has triggered a retreat in equity markets and a sharp selloff in bonds. While a potential resolution to the war could lift sentiment, the damage already inflicted on energy infrastructure and the prospect of sustained high oil prices continue to weigh on global economic growth and inflation expectations.
Oil has become the primary driver of market volatility, surging nearly 90% this quarter to trade above $100 per barrel. This price action has forced bond investors to recalibrate their expectations for interest rate hikes. Analysts currently estimate that oil could trade between $100 and $190, with an average forecast of $134.62, provided supply disruptions continue.
