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By Marc Jones LONDON (Reuters) -Below are five charts showing the volatile response of global financial markets to the war between Israel and Hamas over the last two years. 1/TAKING STOCK Israeli stocks and those of the world's big weapons makers have surged since the October 7, 2023 attacks.  Defence stocks were already on the rise due to Russia's invasion of Ukraine and rising risks elsewhere, but they accelerated sharply as the conflict in Gaza grew and are now more than 120% higher than they were when Hamas attacked Israel. MSCI's Israel stocks index is up more than 80% too – roughly 30 percentage points more than the main global stocks benchmarks – the shekel is up against the dollar following the greenback's slump this year, while some of Israel's banks have kept up with the defence rally.  2/CREDIT RATING CUTS The cost of the war meant Israel suffered its first ever credit rating downgrades in 2024, starting with Moody's four months after the Hamas attacks, followed by S&P in April and Fitch in August that year. At the depths of conflict, credit default swap markets – where investors go to hedge risk – even priced the possibility that Israel could lose its investment grade status and get downgraded to the 'junk' category of sovereign debt. Those worries have receded this year, though, and CDS prices currently point to no further downgrades.  3/ECONOMIC DAMAGE Israel's $580 billion economy was also slowed drastically by the war. Last October the country's finance ministry estimated it had already cost it around 14 billion shekels ($3.75 billion), although that will be far higher now. Economic growth ground to a near standstill last year but it is expected to be a more robust 2.5% this year according to the country's central bank, and could be more than 5% next year if a "peace dividend" materialises.     4/OIL AND GAS Oil rose above $90 a barrel and European natural gas prices saw their biggest jump in six months in the immediate aftermath of the 2023 Hamas attacks, but the market quickly shrugged it off and Brent dropped back to $75 by the end of that year. Escalating tensions with Iran then pushed oil higher again in early 2024. That reversed too when it turned into little more than a skirmish although there was a more significant, albeit also brief, spike this year when U.S. forces struck Iran’s three main nuclear sites.           5/GOLD RUSH Safe-haven gold rose nearly 3% after the Hamas attacks. It was its biggest weekly jump in six months, and gold hasn't looked back since.  Though there are plenty of additional reasons driving it now too, the fact is that move marked the start of a remarkable 120% rally that has just pushed bullion past $4,000 a troy ounce for the first time.     (Reporting by Marc Jones; additional graphics by Sumanta Sen and Pasit Kongkunakornkul; Editing by Hugh Lawson)

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(Reuters) -New York Federal Reserve President John Williams backs more interest rate cuts this year given the risk of a further slowdown in the labor market, according to an interview published by the New York Times on Thursday. Williams, the Fed vice chair and a permanent voting member of the U.S. central bank's rate-setting Federal Open Market Committee, added, however, that the current labor market slowdown did not point to an imminent recession. "My own view is that, yes, we would have lower rates this year, but we'll have to see exactly what that means," Williams told the newspaper.  When asked if he anticipated two more 25-basis-point cuts to the Fed's policy rate, currently set in the 4.00%-4.25% range, Williams said, "when I approach future meetings, if we get information that is broadly consistent with my outlook – which is for inflation to move up a bit to around 3% and for the unemployment rate to gradually move up a little bit – then I think the path for policy should evolve the way we expect." Williams noted that the Fed is trying to balance policy to lower inflation, which remains above the central bank's 2% target, while at the same time offering support for a job market that's exhibiting signs of weakness. With the current stance of monetary policy, "I do feel like we are well-positioned in terms of having policy that's modestly restrictive and that is helping us get to 2% inflation on a sustained basis." Williams, however, added that it would be very damaging to the economy and the Fed's credibility if inflation were allowed to go well above the 2% level without the central bank taking steps to lower it. "But we need to do it in a way that does our best to minimize the risk of the labor market cooling more sharply." The U.S. central bank cut its policy rate by a quarter of a percentage point at its September 16-17 meeting, a move Fed Chair Jerome Powell and others characterized as a way to leave policy tight enough to still restrain the economy and put downward pressure on inflation, while offering some support for the job market. TARIFFS' IMPACT ON INFLATION LESS THAN EXPECTED Williams' comments are in line with the minutes of the September 16-17 meeting that were published on Wednesday. According to the minutes, Fed officials last month agreed that risks to the U.S. job market had increased enough to warrant a rate cut, but they remained wary of high inflation amid a debate within the central bank over how much borrowing costs were weighing on the economy. The Fed's next policy meeting is slated for October 28-29, with another quarter-percentage-point rate cut anticipated by financial markets. In his interview with the New York Times, Williams said President Donald Trump's trade tariffs were not putting as much upward pressure on inflation as many observers had expected. "Tariffs have boosted inflation by maybe a quarter of a percentage point, up to a half point, in terms of the price level," he said, adding that "underlying inflation seems to be moving gradually lower toward 2%." "I don't see any signs of second-round effects or factors that could be amplifying the effects of tariffs on inflation," Williams added. He also noted that a changing economy is taking some pressure off of inflation. "I think there's more downside risks to the labor market and employment, and that is something that takes some of the upside risk off of inflation."  Williams also said he cared deeply about the independence of the Fed, which has come under intense pressure from the White House this year to deliver deep rate cuts. President Donald Trump also has attempted to remove Fed Governor Lisa Cook from her position. (Reporting by Michael S. Derby in New York and Shubham Kalia and Nilutpal Timsina in Bengaluru; editing by Sharon Singleton, Hugh Lawson, Mark Heinrich and Paul Simao)

(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)