Market Impact of Middle East Conflict Escalation

WealthCoffee · 2026-03-22T08:30:22+00:00

The Iran-US conflict and the Russia-Ukraine conflict are both conflicts affecting the international order. In 2022, the global economy faced recovery following the COVID-19 pandemic, US interest rate hikes, and domestic economic pressures, with fiscal and monetary policy adjustments to address demand and supply challenges.

WealthCoffee

2026-03-22 08:30:22

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Performance of Capital Markets After the U.S.-Iran War Begins

Compared to the Russia-Ukraine conflict in 2022, the current U.S.-Israel-Iran conflict is also an international regional conflict impacting the post-World War II international order. During the Russia-Ukraine conflict, the fighting occurred on European soil, far from Asia, causing a temporary disruption to Europe’s energy supply and forcing Europe to seek alternative energy sources. Globally, the COVID-19 pandemic restrictions were lifted, gradually easing pandemic impacts. The Federal Reserve began a rate hike cycle, initiating the most aggressive rate hikes since the 1980s, with a total of 7 increases throughout the year, totaling 425 basis points. President Biden promoted value-based diplomacy and supply chain “de-risking” by strengthening NATO and allied cooperation, withdrew troops from Afghanistan, and supported Ukraine alongside the EU. Domestically, China’s economy grew by 3.0% in 2022, with growth rates slowing initially and then accelerating. Due to COVID-19, Shanghai’s pandemic situation persisted in the first half of the year, but in the second half, the country gradually transitioned to pandemic control, with expectations of normal economic and social operations resuming. The Central Economic Work Conference identified “shrinking domestic demand, supply shocks, and weakening expectations” as the three major pressures. Fiscal policy was strengthened, with a fiscal deficit rate of 3.0% in 2022 and an additional special bond issuance of 3.65 trillion yuan. Monetary policy remained accommodative, with two reserve requirement ratio cuts totaling 0.5%, a 15 basis point reduction in the one-year LPR, and a 35 basis point cut in the five-year LPR. At that time, China was experiencing moderate inflation, with CPI growth shifting from decline to increase, reaching 2.0% for the year, while PPI fell from its 2021 peak to 4.0%, narrowing the divergence.

Recommend accessing the Caixin database for real-time macroeconomic data, stocks, bonds, corporate figures, and financial statistics.

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