Stock markets around the world are falling and the price of crude oil is surging after Israel declared a state of war following an attack over the weekend by the militant group Hamas.
Futures for the blue-chip Dow Jones Industrial Average are down 150 points, or 0.42%, after the index finished last Friday (October 6) up 288 points. The benchmark S&P 500 index is down 0.57%, and the technology-heavy Nasdaq index has slipped 0.74%.
At the same time, energy prices are spiking higher with war breaking out in the Middle East. Brent crude oil, the international standard, is up 3.36% at $87.41 U.S. per barrel.
West Texas Intermediate (WTI) crude oil, the U.S. benchmark, has risen 3.66% to $85.83 U.S. a barrel. Last week, global energy prices sold off sharply.
War in the Middle East is likely to disrupt global oil supplies and could fuel further inflation around the world, complicating the macroeconomic situation for many countries, including Canada.
The Israeli government has officially declared war and gone on the offensive after a rocket barrage and incursions into Israeli territory by Hamas militants killed hundreds of people and led to dozens of people being taken hostage.
European and Asian stocks are also under pressure after the eruption of violence in the Middle East, though shares in oil companies and energy indexes are marching higher.
London’s FTSE 100 index, which has major energy companies on it such as British Petroleum (BP) and Shell (SHEL), advanced 0.6%. However, the Paris CAC 40 index is down 0.1% and Frankfurt’s DAX index has fallen 0.2%.
Hong Kong’s Hang Seng Index was up 0.2%, while the Shanghai Composite declined 0.4% and Tokyo’s Nikkei 225 index fell 0.3%.
Looking ahead this week, the big U.S. banks, including Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) kick off third-quarter earnings season in the coming days.
Also this week will be two widely watched inflation reports: the Producer Price Index on October 11 and the Consumer Price Index on October 12. Each report will be scrutinized for factors that could influence the future direction of interest rates.