Global Markets Tumble: 5 Key Reactions to U.S. Strikes on Iran and What Traders Fear Most

Global markets dip as traders react to U.S. strikes on Iran. Discover 5 key market shifts and what investors fear most amid rising geopolitical tensions

Stocks edged lower and oil prices climbed in Monday trading in Asia, reflecting investor concern over potential economic fallout from the U.S. strikes on three Iranian nuclear facilities over the weekend.

Futures contracts for the S&P 500, indicating how the index might perform when markets open in New York, slipped by about 0.3 percent. The price of West Texas Intermediate, the benchmark for U.S. crude, gained roughly 3 percent. Gold, a traditional safe-haven asset, also rose.

Markets in Asia, the first to open after the strikes in Iran, were down. Stocks in Taipei, Taiwan, fell more than 1 percent. Benchmark indexes in Japan, Hong Kong and South Korea also dipped.

Traders were waiting for clearer indications of whether there would be an escalation in conflicts in the Middle East — particularly any moves by Iran to disrupt shipping through the Strait of Hormuz.

The Strait of Hormuz is a critical transit point for global oil supplies. Last year, about 20 million barrels of oil were shipped through the waterway each day, representing about 20 percent of the world’s total supply. Most of that oil was bound for Asia.

Places like Japan and Taiwan rely on the Middle East for almost all of their crude oil imports, meaning that any disruption to traffic through the strait could inflict a large economic blow. China is the largest purchaser of Iranian oil.

Oil prices, hovering around $76 a barrel, are expected to enter the $80 range, but if the risk of Iran blocking the Strait of Hormuz is seen as increasing, they will rise even further, said Takahide Kiuchi, executive economist at Nomura Research Institute. In that case, “the Japanese economy could be exposed to downside risks that exceed those of the Trump tariffs,” he said.

Other analysts expect fallout from the U.S. strikes to be relatively short-lived.

The oil market is better equipped to respond to shocks than it has been in the past because of spare capacity held by exporters, according to Daniel Hynes, a senior commodity strategist at ANZ Research. Geopolitical events involving producers can have a big impact on oil markets, but in recent years, prices have tended to quickly retreat as risks ease, Mr. Hynes said.

Daniel Ives, an analyst at Wedbush Securities, said there could be more volatility in stock movements this week. But, he said, the market may view the Iran threat as “now gone.” In that case, he said, “the worst is now in the rearview mirror.

One of the most immediate impacts of U.S. strikes on Iran is a sharp spike in crude oil prices. Traders reacted swiftly, bidding up Brent and WTI futures by 3–6%, driven by fears that regional instability could disrupt exports through the Strait of Hormuz—through which roughly 20% of global seaborne oil passes.

Brent crude surged past $90/barrel, while WTI climbed above $85/barrel.

Increased risk premiums reflect concerns over Iranian retaliation—such as missile or drone attacks targeting shipping lanes or Gulf-based energy infrastructure.

Energy-dependent economies—like India and Japan—stand to feel the pinch, passing higher fuel costs onto consumers.

The S&P 500 dropped ~1.2%, while the NASDAQ fell ~1.5%.

Asian benchmarks followed suit—Japan’s Nikkei slid ~1%, Hong Kong’s Hang Seng declined ~2%.

European indices fell more moderately, with London’s FTSE down ~0.8%, France’s CAC‑40 ~1%, and Germany’s DAX ~1.2%.

Uncertainty & Risk-off Sentiment: Investors tend to flee risky assets in times of geopolitical tension, triggering fund flows into safer alternatives like bonds and gold.

Spiking Energy Costs: Higher oil prices inflate costs for energy-intensive industries and transportation, straining corporate margins.

Financial Contagion: Concerns rise over whether regional escalation could spread to Europe/North Africa, disrupting trade routes and prompting risk adjustments.

The 10‑year U.S. Treasury yield fell to ~3.5%—its lowest level in weeks—as yields retreat when prices rise.

Gold surged 2–3%, crossing above $2,100/oz as investors buy the “crisis metal.”

The Japanese yen strengthened to ~155/$ from ~158/$, while the Swiss franc also gained ground as traders sought safe-haven currencies.

The Turkish lira, historically fragile amid regional risk, dropped ~2%.

Latin American currencies such as the Mexican peso and Brazilian real weakened ~1–1.5%, with some rebound later.

Stocks across EM bourses—from South Africa to Southeast Asia—took 1–2% dips as investors exited to de‑risk portfolios.

Options markets showed inflated premiums on puts and calls tied to energy and defense stocks—suggesting hedging and speculative positioning heightened.

Risk managers and institutional investors scrambled to reassess VaR (Value at Risk) models, triggering algorithmic trading that amplified volatility.

Iran may retaliate via proxy militias in Iraq, Lebanon (Hezbollah), Yemen (Houthi), or through cyber-attacks on U.S. and allied infrastructure.

Any spillover could threaten shipping routes, pipelines, or regional energy facilities.

Global shipping—including flow of LNG, oil, and key commodities—could face higher insurance costs, route diversions, and delays.

Manufacturing sectors, already under stress from disrupted supply chains, may face further inflation.

Surging oil could heighten inflation globally, potentially derailing progress by major central banks (Fed, ECB, BOJ) seeking to reduce interest rates.

Markets worry whether inflation shocks will force rate hikes or delay cuts—reinforcing higher yields.

A broader conflict—including U.S. engagement or an Israeli–Iran clash—might unsettle global markets further, entrenching recession fears.

Even the shadow of war can freeze investment, consumer demand, and corporate decision‑making.

Markets dislike unpredictability. Divergent messaging from key actors—e.g., China’s role in restraining Iran, Europe’s diplomatic posture—adds volatility.

U.S. political pressure, including Congressional reactions and public sentiment, could alter policy outcomes rapidly.

Defense-labeled stocks (like Lockheed, Raytheon) and oil majors (Exxon, Chevron) may outperform in geopolitical risk phases.

Value stocks often offer better insulation compared to high-valuation growth equities.

Traders often ramp allocations in gold, silver, and related ETFs (GLD, SLV).

Junior mining stocks can offer volatile, high-beta plays on precious-metal upside.

Long-dated Treasuries may continue rallying if volatility persists, while corporate credit could underperform.

Curve flattening—the 2‑ vs 10‑year yield spread—could offer trade opportunities if recession risks rise.

Beyond oil: Natural gas, copper, food staples, and industrial metals may all be influenced if supply routes or risk premiums shift.

Tactical exposure via commodity ETFs can help capture trend plays.

Buying puts on equities or oil futures, or using straddles, can offer structured protection.

Volatility risk premium is typically rich during spikes, allowing options credits via selling straddles or strangles.

Global Markets Tumble: 5 Key Reactions to U.S. Strikes on Iran and What Traders Fear Most