IMF Warns Middle East War Threatens Global Economic Stability

Posted on March 5, 2026 by Ignacio Teson

Kristalina Georgieva warned during a conference in Bangkok that markets could be affected if the conflict drags on.

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, warned that a prolonged conflict in the Middle East could affect inflation, financial markets, energy prices and global growth, stressing that the war is testing the resilience of the world economy.

Her remarks were made during the Asia in 2050 conference held in Bangkok. In her speech, Georgieva analyzed the global outlook amid the military confrontation involving the United States and Israel against Iran.

“In recent days, global economic resilience has once again been tested by the new conflict in the Middle East,” she said.

She added that if the conflict persists, it has “clear potential to affect global energy prices, market sentiment, growth and inflation, creating new challenges for policymakers.”

IMF closely monitoring the situation

Georgieva said the IMF, “as the guardian of international economic and financial stability,” is closely monitoring developments.

The institution is also assessing and quantifying the regional and global economic repercussions, which will be reflected in the upcoming April edition of the World Economic Outlook report.

“So far, we have seen disruptions to trade and economic activity, sudden increases in energy prices and volatility in financial markets,” Georgieva warned.

She added that the situation remains highly fluid and is unfolding in an already uncertain global economic environment. “It is still too early to assess the full economic impact on the region and the global economy,” she said, noting that the outcome will depend on the scope and duration of the conflict.

“The new normal is uncertainty,” Georgieva concluded, stressing that the world is going through a period of major global transformations in technology, demographics, trade and geopolitics — an era of shocks and uncertainty.

Oil Extends Gains as Wall Street Returns to the Red

Posted on March 5, 2026 by Ignacio Teson

Oil prices continued to climb amid persistent market fears that the conflict in the Middle East could escalate and disrupt global energy supplies. Meanwhile, U.S. and European stock markets moved lower.

Wall Street operators are ready for the earnings season.

Major Wall Street indexes traded in negative territory on Thursday as investors continued to digest the potential economic impacts of the war in the Middle East. The brief respite seen earlier in the week has yet to materialize in oil prices, which remain the market’s main focus. Although crude slowed its early-week surge, prices moved higher again on Thursday, with Brent crude rising above $83 per barrel.

In Asia, major indexes rebounded after a sharp sell-off on Wednesday. South Korea’s Kospi index jumped 9.6%, partially recovering from the previous day’s 12.06% plunge—the largest daily drop in its history. Japan’s Nikkei gained 1.9%, while markets in Shanghai and Hong Kong closed up 0.6% and 0.3%, respectively.

In Europe, the Euro Stoxx index slipped 0.58%. Among major markets, France’s CAC 40 fell 0.85%, the U.K.’s FTSE 100 declined 0.62%, while Germany’s DAX edged up 0.85%.

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Against this backdrop, the S&P 500—tracking the largest companies listed in New York—fell 0.88%, while the tech-heavy Nasdaq Composite dropped 0.54%. The Dow Jones Industrial Average declined 1.84%.

The day’s biggest gainers included Expedia (+11.09%), Booking (+8.26%), and LyondellBasell Industries (+8.33%). On the other hand, the steepest declines were seen in United Airlines Holdings (-7.6%), Delta Air Lines (-7.1%), and Corning (-7.44%).

Oil continues to rise

Meanwhile, oil prices remained on an upward trend as markets continued to worry about a potential escalation of the conflict and its impact on global energy supplies.

European benchmark Brent crude rose another 3.46% to $84.27 per barrel on Thursday. U.S. benchmark West Texas Intermediate (WTI) climbed 6.28% to $79.32.

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Although the pace of gains has slowed, some analysts warn that a prolonged conflict disrupting supply could push prices above $100 per barrel.

Bitcoin Climbs to $73,000 and European Markets Rally

Posted on March 5, 2026 by Ignacio Teson

The U.S. president called for the swift approval of a series of bills aimed at regulating the digital asset market.

Trump can take credit for a bullish Bitcoin trend today.

The cryptocurrency market is posting strong gains at the start of the session, buoyed by renewed support from Donald Trump. In that context, Bitcoin (BTC) jumped 6.6% to $72,800, according to Binance.

The broader market is moving in tandem. Ethereum (ETH) is up 7.5% to $2,126, with major altcoins also trading firmly higher.

[[ETH/USD-graph]]

Caution lingers amid Middle East tensions

Late Tuesday, Trump criticized major U.S. banks on social media, accusing them of attempting to undermine the proposed GENIUS Act — legislation designed to regulate stablecoins — by delaying another key regulatory bill, the CLARITY Act, in the U.S. Senate.

“Banks are making record profits, and we will not let them undermine our powerful Crypto Agenda, which will end up going to China and other countries if we don’t act on the Clarity Act,” Trump wrote. “Banks should not be trying to weaken the GENIUS Act or hold the Clarity Act hostage. They need to make a fair deal with the Crypto industry.”

The CLARITY Act was approved by the House of Representatives in July but still requires Senate approval.

Bitcoin had previously plunged following the coordinated U.S.-Israeli strike on Iran that killed Supreme Leader Ayatollah Ali Khamenei. It later recovered its weekend losses amid heightened volatility, which wiped out roughly 157,000 leveraged traders and triggered about $657 million in liquidations across long and short positions.

Traditional markets rebound

Meanwhile, European equities also staged a recovery. The STOXX Europe 600 rose 1.4%, while Germany’s DAX gained 1.7%. Investors reacted to reports of possible contacts between Iran and the United States aimed at de-escalating the conflict, while Spain’s stock market shrugged off Trump’s trade threats.

The pan-European STOXX 600 closed 1.4% higher after having fallen more than 4% from its record high reached on Friday. The DAX’s advance marked its strongest daily gain since May, reflecting a temporary easing of investor concerns over a prolonged Middle East conflict.

Mexican Peso Trims Losses as Markets Keep Close Watch on Middle East Tensions

Posted on March 4, 2026 by Ignacio Teson

The peso strengthened on Wednesday after posting its largest single-day loss of the year in the previous session, as concerns over the economic impact of the Middle East conflict had rattled markets.

The Mexican currency rebounded against the dollar, with the exchange rate closing at 17.5592 pesos per dollar. Compared with Tuesday’s official close of 17.6367, according to data from the Banco de México (Banxico), this marked a gain of 7.75 centavos, or 0.44%.

The dollar traded in a range between a high of 17.7738 pesos and a low of 17.5247. The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, slipped 0.27% to 98.79.

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Jitters ease, but volatility lingers

Earlier, The New York Times reported that Iranian intelligence officials were willing to engage in talks with the CIA to end the war, helping to calm nerves in financial markets. However, analysts cautioned that volatility could persist.

The Middle East conflict remains the primary catalyst for market moves, with mixed signals about its trajectory and the risk of further escalation keeping investors highly sensitive. Oscillator indicators suggest there is still room for additional peso weakness.

A key level for the exchange rate stands at 17.70; a sustained move above that threshold could open the door toward 18.00 pesos per dollar. This week, the heaviest trading volumes have been concentrated around 17.30 and 17.70, potentially defining a short-term range — although a move toward 18.00 cannot be ruled out if tensions intensify.

U.S. labor data in focus

On the economic front, data released Wednesday showed that U.S. private-sector hiring increased by 63,000 jobs last month, following a revised gain of 11,000 in January. Economists had expected an increase of 50,000 positions.

The figures come ahead of Friday’s closely watched official employment report, which includes the unemployment rate, nonfarm payrolls and average hourly earnings. In the meantime, traders are likely to remain focused on headlines related to developments in the Middle East.

The European Union Moves to Reduce its Dependence on Chinese Manufacturing

Posted on March 4, 2026 by Ignacio Teson

Although the Industrial Acceleration Act (IAA) has yet to be formally unveiled, several key elements of the European initiative have already emerged.

As part of its broader push to decarbonize the economy and reduce dependence on low-cost Chinese imports, the European Commission is set to outline its roadmap to strengthen the competitiveness of the European Union’s manufacturing sector.

At the center of the debate is the proposed Industrial Acceleration Act, which would introduce low-carbon and “Made in Europe” requirements for public procurement and manufacturing subsidies covering sectors such as aluminum, cement, steel, and technologies including wind turbines and electric vehicles, according to Reuters.

The initiative aims to ensure that by 2035, manufacturing accounts for 20% of the EU’s economic output, up from the current 14%. The European Parliament and EU member states will negotiate the final version of the bill once it is formally presented by the Commission, and further amendments are expected.

Support and criticism

Supporters argue that the EU needs local content rules similar to those adopted by competitors such as the United States, China, Brazil and India in order to address a significant investment gap. Bas Eickhout, co-chair of the European Green Party, said the bloc must offer “an alternative to Trump’s agenda,” which he described as favoring a fossil fuel–based economy.

Critics, however, warn that the legislation could alienate key trading partners.

One contentious issue is how broadly the “Made in Europe” label would be defined. France has suggested limiting it to the EU’s 27 member states and single-market countries such as Norway, Iceland and Liechtenstein. Other EU countries favor a broader scope, potentially including the United Kingdom.

Draft proposals would reportedly cover the 21 mostly developed countries with which the EU has public procurement commitments. The legislation would also seek to guarantee meaningful participation by EU companies in foreign investment projects.

The Commission has already delayed the proposal several times due to internal disagreements, and additional changes were reportedly introduced this week.

“We are very disappointed because the level of demand we expected is far from significant,” said Laurent Donceel, director of industry association Hydrogen Europe, referring to the scaled-back provisions. Among the revisions is a reduction in the required share of low-carbon steel production eligible for subsidies, lowered to 25% from the initial 70% target.

South Korea’s Main Index plunges 12%, Posts Worst Drop Ever

Posted on March 4, 2026 by Ignacio Teson

South Korea’s benchmark KOSPI plunged 12%, marking its steepest daily drop since the global financial crisis and the worst one-day decline since 2008.

According to Bank of America, the selloff was driven by the unwinding of highly leveraged positions and heavy foreign outflows from Korean equities. The index has now fallen roughly 15% since the outbreak of the Middle East conflict.

“The sharp decline reflects excessive leverage in long positions prior to February 28, 2026, when market sentiment was extremely bullish on Korean technology stocks due to the aggressive shortage of memory chips used in AI server production,” said BofA strategist Chun Him Cheung.

He added that the rapid liquidation of long positions wiped out crowded trades, triggering a broader deleveraging across the Korean equity market. Since February 28, foreign investors have been net sellers in margin positions tied to the KOSPI, accelerating the market’s downturn.

Won weakens amid market turmoil

The selloff has also hit the Korean currency. The won weakened sharply, with the dollar climbing above the 1,500 level. Cheung warned that foreign-exchange volatility could persist as long as geopolitical tensions remain unresolved.

He also noted that the Middle East conflict could begin to erode South Korea’s trade position through higher oil prices, adding another layer of risk to the country’s economic outlook.

Mexican Peso Falls 35 Cents Against the Dollar Amid Middle East Jitters

Posted on March 3, 2026 by Ignacio Teson

The Latin American currency weakened amid persistent risk aversion in financial markets, as investors grew increasingly concerned about the economic fallout from the war in the Middle East.

The Mexican peso depreciated sharply against the U.S. dollar in Tuesday’s trading session. The local currency came under pressure as heightened geopolitical tensions fueled a flight to safety.

The exchange rate closed at 17.6367 pesos per dollar. Compared with Monday’s official close of 17.2853, according to data from the Banco de México (Banxico), this represented a loss of 35.14 centavos, or 2.03%.

During the session, the dollar traded in a range between a high of 17.8770 pesos — its strongest level since mid-January — and a low of 17.2907. The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.48% to 99.03.

[[USD/MXN-graph]]

On Tuesday, the United States and Israel continued their attacks on Iran, aimed at dismantling the ayatollah-led regime and its nuclear ambitions. Meanwhile, Iran maintained actions against vessels in the Strait of Hormuz, a key artery for global oil trade.

Benchmark oil prices surged for a second straight day, as disruptions to shipping routes increased costs for companies. Traders are adjusting their outlooks in light of rising inflation expectations and the potential implications for monetary policy.

The war and its impact on energy prices continue to dominate currency markets. The longer oil prices remain elevated, the greater the strain on importing nations and the heavier the drag on global growth.

Currency pressure largely reflects the rebound in crude prices and mounting concerns over inflation stemming from the conflict, which have strengthened the dollar’s appeal as a defensive asset. Investors remain wary that a prolonged Middle East conflict could trigger significant supply disruptions, pushing oil — and inflation — even higher.

Inflation Fears Resurface on Wall Street Amid War Tensions

Posted on March 3, 2026 by Ignacio Teson

U.S. stocks fell sharply Tuesday, with all three major benchmarks closing in negative territory, as escalating tensions between the United States, Israel and Iran fueled concerns about slowing economic growth and the inflationary impact of higher oil prices.

In this context, the Dow Jones Industrial Average dropped 0.83% to 48,501.27 points; the S&P 500 lost 0.94% to 6,817.13; and the Nasdaq Composite declined 1% to 22,516.69.

[[SPX-graph]]

Inflation concerns weigh on confidence

On Monday, both the S&P 500 and Nasdaq had closed higher, rebounding from steep early losses triggered by weekend attacks on Iran by the United States and Israel. The Dow slipped just 0.2%, recovering most of its initial decline. However, investor confidence deteriorated despite the relatively solid close, amid fears of a broader Middle East conflict after Iranian drones reportedly targeted a U.S. embassy in Riyadh and data centers operated by Amazon in the United Arab Emirates and Bahrain.

The U.S. State Department announced Tuesday that it had ordered the departure of non-essential government personnel and their families from Bahrain, Iraq and Jordan.

In his first public remarks since the attacks began, Donald Trump said, “We are already well ahead of our projections,” adding that the United States would continue “whatever it takes.” He later stated on social media that the U.S. has an “almost unlimited” supply of certain types of weapons.

According to analysts at ANZ Bank, “The inflationary impact of the conflict is a major concern for investors, particularly given the sharp rise in oil prices, alongside fears of potential supply disruptions.”

Markets worry that a sustained increase in crude prices could drive global inflation higher and prompt a more hawkish stance from major central banks. Rising oil prices represent a negative supply shock, lifting inflation while increasing downside risks to growth. “The ultimate impact on economies will depend on how long the conflict lasts,” analysts added.

The Federal Reserve’s view

“It is too early to determine how the war with Iran will affect U.S. inflation and growth, but the U.S. economy is less dependent on imported oil than in the past and has shown resilience to energy price shocks,” said John Williams, president of the Federal Reserve Bank of New York, on Tuesday.

Speaking after an event hosted by America’s Credit Unions in Washington, Williams said the economic transmission of the conflict would likely occur mainly through asset prices and financial market reactions, which so far have been relatively moderate.

“No one can be certain how long this will last or what the broader implications will be,” Williams said. “Past experience shows that oil price moves of the magnitude we’ve seen so far do not fundamentally alter the economy, but we will wait and see.”

A surprise move from Trump

Trump also said Tuesday that the United States would cut all trade with Spain after the country reportedly refused to allow U.S. military forces to use its bases for missions related to the strikes on Iran, according to Reuters.

“Spain has behaved terribly,” Trump told reporters during a meeting with German Chancellor Friedrich Merz, adding that he had instructed Treasury Secretary Scott Bessent to “break off all relations” with Spain.

U.S. and Chinese Trade Chiefs to Meet Ahead of Trump–Xi Summit

Posted on March 3, 2026 by Ignacio Teson

The meeting between the two representatives aims to build bridges at a time of intense geopolitical tension.

Xi Jinping and Trump will be negotiating in March.

Top U.S. and Chinese trade negotiators are set to meet in mid-March, in talks that will precede the anticipated summit between U.S. President Donald Trump and Chinese President Xi Jinping.

As the conflict in the Middle East escalates following the coordinated U.S.-Israeli strike on Iran, U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet in Paris late next week to discuss potential trade agreements ahead of the leaders’ summit, according to Bloomberg News.

Although Trump is expected to travel to Beijing at the end of March, Xi has reportedly shown caution following the military campaign in Iran, which resulted in the killing of Supreme Leader Ayatollah Ali Khamenei and the U.S. capture of Venezuelan leader Nicolás Maduro in January.

Another issue weighing on Beijing is the U.S. president’s tariff policy, particularly whether he will maintain temporary levies following the ruling by the Supreme Court of the United States.

Key issues on the agenda

Chinese purchase commitments — particularly involving Boeing aircraft and U.S. soybeans — are expected to feature prominently in the discussions. The aerospace giant is reportedly in talks to sell up to 500 aircraft to China, which represents the world’s second-largest aviation market. However, orders have stalled amid bilateral tensions. While Boeing previously delivered roughly a quarter of its aircraft to China, it has not secured a major deal since Trump’s first term.

Last month, Trump said China was considering increasing U.S. soybean imports to 20 million metric tons for the current season, though elevated prices and thin margins have fueled skepticism. Beijing’s last major soybean purchase occurred in late October, shortly before the most recent meeting between the two leaders.

The report also suggests that the future of Taiwan could be addressed. In recent years, Beijing has intensified military exercises around the democratically governed island in an effort to reinforce its sovereignty claims.

Oil Jumps 8% while Wall Street Tumbles More Than 2% Amid Middle East War

Posted on March 3, 2026 by Ignacio Teson

Global markets deepened their losses Tuesday as fears intensified over a broader Middle East war and Iran’s announcement of a closure of the Strait of Hormuz, the critical passageway through which roughly one-fifth of the world’s traded oil flows.

Major stock exchanges extended their selloff, while crude prices surged again, with Brent climbing above $83 per barrel.

U.S. markets were sharply lower. The S&P 500 fell 2.25%, the tech-heavy Nasdaq Composite dropped 2.5%, and the Dow Jones Industrial Average declined 2.29%.

In Europe, the Euro Stoxx 50 tumbled 4.03%. Losses were widespread: Germany’s DAX slid 4.11%, France’s CAC 40 fell 3.45%, and the UK’s FTSE 100 dropped 3.22%.

In Asia, Hong Kong’s Hang Seng Index lost 1.12%, while the Shanghai Composite declined 1.43%. South Korea’s KOSPI 50 plunged 8.55%, and Japan’s Nikkei 225 fell 3.08%.

Oil prices surge further

Brent Crude rose another 7.29% on Tuesday, marking its third consecutive daily gain, as escalating hostilities between the United States, Israel, and Iran — along with threats to maritime traffic through the Strait of Hormuz — heightened fears of supply disruptions from the Middle East. European Brent futures reached $83.49 per barrel after already jumping nearly 7% on Monday.

Meanwhile, West Texas Intermediate (WTI) climbed 7.79% to $76.78 per barrel. In the previous session, the contract had briefly hit its highest level since June 2025 before easing to close 6.3% higher.

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With no rapid de-escalation in sight, the effective closure of the Strait of Hormuz and Iran signaling its willingness to target regional energy infrastructure suggest that upside risks remain elevated — and could intensify the longer the conflict persists.

Strait of Hormuz closure deepens crisis

The U.S.- and Israel-led air campaign against Iran expanded Monday, with Israel striking Lebanon and Iran retaliating by targeting energy infrastructure across Gulf states and oil tankers in the Strait of Hormuz.

Oil tankers and container ships have begun avoiding the route after insurers reportedly withdrew coverage for vessels operating in the area, while global shipping rates for oil and gas have surged.

Concerns escalated further after Iranian media reported that a senior commander of the Islamic Revolutionary Guard Corps declared the Strait of Hormuz closed and warned that Iran would fire on any vessel attempting to pass through the waterway.