Whether or not it is due to some members of the globe's wide investment suite downing tools for the Northern Hemisphere summer, a touch of divergence from central banks or a shifting geopolitical landscape in the Middle East, is rather difficult to say, but markets are suffering a small crisis of confidence.
Such is the world that we live in that state sponsored murder is measured in geopolitical risk to markets rather than any outrage at cross border assassinations. Whether or not this proves to be the case in the killing of Ismail Haniyeh, the leader of Hamas, in Iran will no doubt come to light, but such incidents remind the market on how it should not take the Middle East as a contained issue.
The names and words such as Iran, Israel, Hamas, assassination, and dead in the same headline usually stimulates the conditional reflexes of any trader worth his or her salt leading to short-covering or even allocating some money to oil as a hedge against escalation and retaliation, which might adversely affect oil production from the region. It is the killing of a Hamas leader on Iranian soil that led to the jump in oil prices yesterday morning.
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