Aurelia Butler

WASHINGTON (Reuters) -The Israeli-Hamas war has sharpened focus on rising geopolitical risks for financial markets, as investors wait to see if the conflict draws in other countries with the potential to drive up oil prices further and deal a fresh blow to the world economy.Israel said on Sunday it would continue to allow Gazans to evacuate south as its troops readied for a ground assault on the Hamas-controlled Gaza Strip in retaliation for unprecedented attacks by the Palestinian militant group.Oil prices leapt nearly 6% on Friday, as investors priced in the possibility of a wider Middle East conflict. The first indicator of reaction to weekend developments will likely come when oil starts trading in Asia later on Sunday. [O/R] “It looks like we’re headed for a massive ground invasion of Gaza and a large-scale loss of life,” said Ben Cahill, senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS). “Anytime you have a conflict of this scale, you will have a market reaction.”Market reaction in the past week has been relatively muted, though Israel’s shekel currency took a big hit. “I have no clue whether markets will remain relatively well behaved,” said Erik Nielsen, group chief economics advisor at UniCredit. “It almost certainly depends on whether this latest conflict remains localized or whether it escalates into a broader Middle Eastern war.”The S&P 500 fell 0.5% on Friday. Safe-haven assets saw buying with gold up more than 3% on Friday and the U.S. dollar touching a one-week high.An expanding conflict would also likely cause inflation and, as a byproduct, interest rates around the world to accelerate further, said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey. However, while inflation and rates in other countries will likely rise in this worst-case scenario, the United States could be the exception as foreign investors pour capital into what they deem a safe haven during global conflict, Baumohl noted.”Interest rates could go down,” he said. “Expect the dollar to strengthen.”In Europe, economists said the bar for another rate hike from the European Central Bank was high.The war between the Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia’s invasion of Ukraine last year.”If the Ukraine war taught us anything, it’s not to underestimate the effect of geopolitics,” Nomura European economist George Moran said on the bank’s week ahead podcast.Other energy markets could be impacted, as seen in recent developments such as Chevron (NYSE:CVX) halting natural gas exports through a major subsea pipeline between Israel and Egypt. Rising oil prices are unlikely to have a significant impact on U.S. gas prices or consumer spending, analysts noted. More

The spectre of a wider conflict in the Middle East poses a fresh threat to the global economy just as the world emerges from shocks triggered by Covid-19 and the Ukraine war, finance ministers and officials have warned.Broader regional tensions would have significant economic ramifications, they said, as they rounded off meetings of the IMF and World Bank in Morocco this week. The biannual events took place as Israel declared war on Hamas and launched a major bombardment of the Gaza Strip. “If we are facing any escalation or extension of the conflict to the whole region we will face big consequences,” Bruno Le Maire, France’s finance minister, told the Financial Times, adding that risks ranged from higher energy prices stirring inflation, to a decline in confidence. Kristalina Georgieva, the head of the IMF, warned of a “new cloud on not the sunniest horizon for the global economy”, encapsulating fears among the delegates in Marrakech that the medium-term prospects for the global economy are lukewarm. On the other side of the Atlantic, Jamie Dimon, chief executive of JPMorgan, called this “the most dangerous time the world has seen in decades”.Kristalina Georgieva, the head of the IMF, warned of a ‘new cloud on not the sunniest horizon for the global economy’ More

MARRAKECH (Reuters) – Ukraine is finding it harder to secure financial support as the attention of officials in key donor countries shifts to upcoming elections and geopolitical tensions heighten, Finance Minister Serhiy Marchenko told Reuters on Saturday.”I see a lot of tiredness, I see a lot of weakness among our partners, they would like to forget about the war but the war is still ongoing, full-scale,” Marchenko said on the sidelines of the International Monetary Fund (IMF) and World Bank meetings in Marrakech.He said Ukraine is making “twice the effort right now to convince our partners to provide us with support compared to the last annual meetings” in April.As the war with Russia rages on, Ukraine needs to secure Western financial support to cover a $43 billion budget gap in 2024. Talks this week have been overshadowed by the conflict between Israel and Hamas, which broke out just as delegates were making their way to Marrakech.Marchenko said “a geopolitical shift and internal political context in different countries” was dampening governments’ appetite to support Ukraine, mentioning elections scheduled in the U.S. and the European Union next year.Ukraine has earmarked additional tax receipts and funds to be raised from internal debt, but it will be dependent on outside help for the bulk of next year’s spending requirements.”We already have some commitments, like $5.4 billion from the IMF programme, and we expect commitments from Japan and United Kingdom, and of course, we rely on our key partners and allies the United States and European Union,” Marchenko said in the interview.The EU is working on a 50 billion-euro ($52.6 billion)Ukraine package for 2024 through 2027. Marchenko said Ukraine is seeking 18 billion euros of that in 2024, matching the package received for this year. Marchenko welcomed the efforts to harness frozen Russian state assets, saying that what was previously portrayed by Western backers as an “achievable goal” now “sounds like a plan”. Legal concerns, among others, have complicated recoveries.CREDITOR DISCUSSIONSSince Moscow’s February 2022 invasion, most of Ukraine’s bilateral lenders have suspended repayment obligations until 2027, and the country has agreed a two-year freeze on $20 billion of international bonds that runs through August.Ukraine has been sounding out major investors over plans to restructure the international debt and the possibility of raising fresh financing, Reuters reported on Oct. 9, citing people with knowledge of the discussions.”We have some time to prepare discussions with private creditors,” Marchenko said, declining to provide a timeframe on when formal talks with creditors may start.”Our natural desire is to preserve access to the market,” he added.Marchenko said credit enhancement notes could be “one of the ways” to raise funds, but that how such guarantees would work depends on the future of Ukraine’s growth, among other economic factors. This has not been a topic of discussion at the meetings in Marrakech, he said. Ukraine’s economy is set to grow 5% in 2024, Marchenko told the meetings earlier this week, and sufficient gas storage for the winter should buttress the economy from a potential rise in prices, he told Reuters.($1 = 0.9516 euros) More