---
title: "Markets most at risk from world conflict"
publisher: "Stockmark.IT"
author: "Stockmark.IT Website"
published: "2024-10-03T05:43:39+00:00"
modified: "2024-10-03T05:43:39+00:00"
date: 2024-10-03
canonical: "https://stockmark.it/markets-most-at-risk-from-world-conflict/"
category: "Banking"
categories: ["Banking", "Economy", "Markets"]
image: "https://i0.wp.com/stockmark.it/wp-content/uploads/2022/12/bank-sm-2.jpg?fit=480%2C270&quality=89&ssl=1"
format: "news"
language: "en-GB"
---

# Markets most at risk from world conflict

**Published:** October 3, 2024
**Author:** Stockmark.IT Website
**Categories:** Banking, Economy, Markets
**Featured image:** ![Black and white photo of two historic buildings with classical architecture, featuring tall columns, ornate carvings, and large windows. The perspective is angled upwards, emphasising the grandeur of the structures. @ stockmark.it](https://i0.wp.com/stockmark.it/wp-content/uploads/2022/12/bank-sm-2.jpg?fit=480%2C270&quality=89&ssl=1)

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Banks and investment firms are increasingly worried about geopolitical risk, according to the Bank of England. This is due to the Middle East conflict. In its latest survey, the Bank polled 93 percent of firms who cited geopolitics to be the greatest threat to the UK financial system. This is an 8-point increase from its previous survey in the first half of this year.

The Bank reported that this was the highest percentage ever recorded in the survey. The Bank’s survey, conducted before the hostilities between Israel & Iran escalated dramatically on Tuesday, sheds some light on investors’ growing concern about conflicts in the world that could cause market turmoil. After the Iranian missile attack on Israel and hours after Israeli troops moved into Lebanon, the oil price jumped.

The latest quarterly report of the Bank’s Financial Policy Committee was released Wednesday along with the survey. Officials said that geopolitics is one of the potential risks to the financial system in the country.

This was the first report from the Committee since the global markets were shaken by a quick but sharp selloff of equities at the beginning of August. The fear about the US economy was stoked after the weaker than anticipated labour market data. The sell-off was also fueled by the rapid unwinding a popular carry trading involving the Japanese currency.

Although this turmoil didn’t spill over to the core financial markets the Bank warned it showed the potential for a worsening of the sell-off.

The committee stated that “values across many asset classes, notably equities returned quickly to stretched levels after the episode.” The committee said that, “although short-lived,” the magnitude of the movements, in response only to limited economic news, shows the potential for market-based financial vulnerabilities to magnify shocks. The Bank highlighted that if hedge funds were forced to unwind trades quickly, which did not happen in August, they could be a future threat.

The Bank reported that hedge funds now have short positions in treasury contracts worth $1 trillion. This is up from $875 billion at the previous record. Asset managers who hold long positions on treasury futures have now taken the opposite side.

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