Global stocks slump as war in Iran lifts oil and dollar
S&P 500 futures slid 1% with benchmarks in Asia and Europe notching similar declines. Brent crude jumped 7.5% to nearly $79 a barrel as the war effectively shut the Strait of Hormuz – a vital artery off Iran’s coast that carries about a fifth of the world’s oil. In Europe, natural gas surged jumped as much as 28%, the biggest increase since August 2023.
Safer assets were in demand as investors cut back on risk. Gold approached $5,400 an ounce. The dollar index climbed 0.5%. Meanwhile, yields rose on short-term Treasuries as investors weighed whether higher energy prices would mean the Federal Reserve is less inclined to cut interest rates.
“The endgame remains highly uncertain, ranging from a relatively swift political exit to a broader regional spillover,” said Mathieu Racheter, head of equity strategy at Julius Baer. “In such a fog of war, markets tend to trade probabilities rather than shifting facts.”
The spiraling conflict in the Middle East is adding fresh headwinds for markets already on edge over shifting US tariff policy, disruption from artificial intelligence and pressure in private credit. Among the most pressing questions for traders are how long the conflict will last and how far hostilities spread.
President Donald Trump said the bombing campaign in Iran will continue, possibly for weeks, and called on the nation’s leaders to capitulate, while the Islamic Republic’s security chief said it has no intention of negotiating with the US. Meanwhile, Aramco halted operations at Saudi Arabia’s largest refinery after a drone strike in the area, according to people familiar with the matter.
“It is still very unclear what the duration of the conflict will be and more importantly, how the energy market reacts,” said Andrea Gabellone, head of global equities at KBC Securities. “One positive for the US is that the market has corrected since January, so we are not in overbought territory. It’s fair to say havens should continue to outperform.”
