Global Market Turmoil: Oil Surges Amid Middle East Escalation 📈

• Market Overview: Global equity markets faced a severe rout this week as the U.S.-Israel-Iran conflict intensified. The MSCI Asia-Pacific index is on track for its sharpest weekly decline since 2020 (-6.6%), driven by a shift toward cash and safe-haven assets. • Energy & Inflation: Oil prices have seen a massive spike due to supply risks. Brent crude rose to approximately US$ 83 per barrel from US$ 69 just a week ago. For Sri Lanka, sustained upward pressure on energy prices typically threatens headline inflation and increases the cost of imports. • Currency & Rates: The US Dollar recorded its largest weekly gain in 16 months (+1.4%). Expectations for central bank rate cuts have been slashed as investors fear a resurgence in inflation. U.S. 10-year Treasury yields jumped 18 bps this week to 4.14%, tightening global liquidity. • Sector Impact: • Technology: High-growth stocks in Asia tumbled (South Korea's Kospi down -10.5%) as investors booked profits. • Commodities: Gold fell 3.7% weekly to US$ 5,078.88 per ounce, pressured by the stronger dollar and rising bond yields. • Economic Outlook: Analysts warn that direct infrastructure damage to Gulf producers could trigger a global recession. For emerging markets like Sri Lanka, these shifts suggest a challenging environment for debt servicing and foreign exchange stability if global funding conditions continue to tighten.