Here’s a look at some of the pressure ​points that are building:

Asia feels the squeeze

Currencies in Asia have suffered some of the sharpest falls across FX markets since the US and Israel attacked Iran in February. ‌

Around 80% of sea-borne oil trade through the Strait of Hormuz is usually destined for Asia, making it the most exposed region to any disruption.

Indonesia has seen its rupiah tumble to a record low on Tuesday, while the currencies of fellow Asian fuel importers, including India and the Philippines, have also hit historic lows.

Central banks have intervened in currency markets for weeks, either directly or through state‑bank action, and are looking for more measures to take.

Currencies in South Korea, Thailand and Malaysia ​have also come under pressure.

“Central banks will be reluctant to sell down reserves,” said Mitul Kotecha, head of Asian FX and rates strategy at Barclays. “

As such, we’re probably going to see more ​creative measures to support their respective currencies.“

Japan suffering too

The war has piled fresh pressure on the yen, already weakened by Japan’s low interest rates and ⁠worries over Prime Minister Sanae Takaichi’s borrowing-led growth plans.

Japan imports about 95% of its oil from the Middle East, leaving the currency highly sensitive to higher energy costs.

Authorities have intervened as the yen slipped towards ​the 160-per-dollar level to deter speculators.

“With oil prices spiking higher, traders naturally attacked the yen, since this is a low-yielding currency, but also one whose fundamentals are most adversely affected by high oil prices,” said Macquarie ​Group global FX and rates strategist Thierry Wizman.

Analysts say intervention is unlikely to reverse the yen’s fall unless the war eases and rates rise soon.

Food shock threat

Food price volatility had only just begun to ease after the 2022 shock sparked by Russia’s invasion of Ukraine.

A fresh jolt now looms as the Middle East war squeezes fertiliser supplies and lifts energy costs — pressures that could be compounded by a return of the weather phenomenon El Niño.

The Baltic shipping index is at its highest since ​2023.

Emerging economies, where food carries a heavier weight in inflation baskets, are likely to be hit hardest.

“Elevated food prices are a problem across the world, but particularly in economies where food makes up a large share ​of the inflation basket or food supplies are reliant on imports,” said HSBC global economist James Pomeroy.

Pain at the pump

Consumers around the world are feeling the squeeze — and one of the first places it shows is at the fuel ‌pump. Markets ⁠especially watch US gasoline prices, which could encourage Trump to reach a deal ahead of the November mid-term elections.

Average US prices of gasoline have risen from around $3 to over $4.50 a gallon, according to the motorist advocacy group AAA.

“If that continues to go up and we head towards $5, there’s going to be a lot of unrest domestically, and that might force Trump to change tack again on the war with Iran,” said Zurich Insurance Group’s chief market strategist Guy Miller.

The energy shock will boost prices on household products made from oil or natural gas, from toothpaste to laundry detergent.

Traders are watching rising inflation expectations that could encourage central banks to raise ​interest rates.

The European Central Bank’s Consumer Expectations Survey showed ​inflation expectations for one year ahead jumped to ⁠4.0% in March from 2.5% in April.

Flight or fight

The airline sector is facing its biggest test since the 2020 COVID-19 crisis sent the world into lockdown.

Jet fuel prices have risen nearly 84% since the conflict started, and shortages are anticipated if the war does not end soon.

Ultra-low-cost carrier Spirit Airlines ceased ​operations earlier this month, citing rising fuel prices as the reason for its failure.

Some airlines say the risk of supply disruption is receding. Still, airlines remain ​an underperformer.

European airline stocks ⁠have slumped roughly 14% this year, while the broader market is up 3%

Bond expectations

Major bond markets steadied after an early war selloff that forced traders to reprice rate expectations. But cracks are re‑emerging and could bubble over, analysts warn.

In Britain, political risk is exacerbating pressure on the local gilt market.

Another is the systemically important US Treasury market, where 10-year yields are hovering around 4.40%, roughly 40 bps above pre-war levels.

Higher US yields also risk ⁠squeezing emerging ​markets that price borrowing off Treasuries.

“There is a danger zone for equity markets and credit markets if we get yields above ​the 4.5% level on 10-year Treasuries,” said Zurich’s Miller. “That has tended to be disruptive.”