Fuel price hikes loading? War between Israel and Iran is jolting markets, driving up oil prices

CapeTalk and 702's Stephen Grootes speaks to Sanisha Packirisamy, Chief Economist at Momentum Investments.

Listen below:

The ongoing conflicts in the Middle East, particularly the one between Israel and Iran, present a significant risk to the economy, due to disruptions to oil supply, trade routes, and tourism, which could potentially lead to higher inflation and slower growth, according to Packirisamy.

"Initially, we saw the typical response, like we usually do when there is conflict in the Middle East that rears its ugly head now and then... We saw gold, the US dollar, and treasuries climb, even though it wasn't by much, but we did see some reaction there. But that basically showed that markets were in a typical risk-off phase as we don't really know the direction of escalation or de-escalation between Israel and Iran."

- Sanisha Packirisamy, Chief Economist - Momentum Investments

"There was an initial dip in equity markets that had a lot of energy exposure... we even saw a reaction in what we would call the 'fear gage of Wall Street', the VIX index which is the Volatility Index of Equity Markets, that picked up around 22 points but then it fell back down to 18... I think we're going to see this ebbing and flowing of market risk as the conflict either hots up or as we see signs of de-escalation coming through."

- Sanisha Packirisamy, Chief Economist - Momentum Investments

"The US dollar outlook is also not that clear," says Packirisamy. She says it's likely to weaken because of Trump's economic policies.

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