The Iran war, which has raged for the better part of two months, has produced a curious paradox. As at April 26, Brent crude has climbed above US$107 per barrel – its highest since September 2022. The price of urea, the world’s most important fertiliser, is up more than 45 per cent since the war began, feeding into food prices globally. Inflation expectations have risen, and the hopes for interest rate cuts that ran high at the start of the year have quietly faded. Yet, key stock markets remain strikingly buoyant.
After dropping about 9 per cent in the immediate aftermath of the war, the S&P 500 has since recovered strongly to close at fresh all-time highs. In Europe and Japan, stocks have climbed over the two months. Singapore’s Straits Times Index sits at roughly the level it was when the war began. The market, in other words, took a hard look at the crisis – and then decided to move on. That decision deserves scrutiny.
