Global stock markets are reacting sharply to the ongoing conflict between Israel and Iran. Over the weekend, missile strikes hit critical military and energy sites in both countries. The U.S., Asia, and Europe all saw market movements as investors rushed to assess the fallout.

In the U.S., Friday’s trading session ended in a rout, with the Dow plunging over 700 points. The S&P 500 and Nasdaq also closed in the red, erasing weekly gains. Meanwhile, oil prices surged more than 7%—the biggest jump since early 2022. That’s no surprise given the strikes on Iranian oil refineries and threats to the Strait of Hormuz, a crucial chokepoint for global oil flow.

Investors now face a dangerous mix: war, rising energy prices, and global economic uncertainty. As the missiles fly, money moves out of stocks and into safer assets like gold, which nearly hit a new record.

Oil and Energy Markets in the Crodailysshairs

With both Iran and Israel targeting each other’s energy infrastructure, oil has become the frontline of this geopolitical clash. Israel has bombed Iranian oil and gas facilities, while Iran has hinted at blocking the Strait of Hormuz—a narrow waterway that handles about 20% of the world’s oil traffic.

This sent WTI crude as high as $75.35 and Brent crude near $78 a barrel. Analysts say prices could soar even higher if the fighting widens or if Iran follows through on its threat to shut the strait. Iran is a top producer in OPEC+, and its oil is critical for the energy balance in Asia and Europe.

In Israel, energy facilities haven’t been spared either. An oil refinery in Haifa was struck, although no casualties were reported. Each strike adds more pressure to already volatile markets, creating ripple effects far beyond the Middle East.

U.S., Asia, and Europe Feel the Heat

The geopolitical shockwaves have spread quickly across global markets. In the U.S., futures rose slightly on Monday after Friday’s big losses, as investors tried to recover some ground. But uncertainty remains high ahead of the Federal Reserve’s rate decision this week.

In Asia, markets opened mixed. Japan’s Nikkei rose 1.21%, and South Korea’s Kospi gained over 1%. However, investors are wary. While some saw a chance to buy discounted stocks, others fled to safer bets. Gold demand surged, with prices nearing all-time highs.

Meanwhile in Europe, futures suggested a weak open. The DAX, CAC 40, and FTSE MIB all pointed lower. Rising oil prices and regional instability are weighing heavily on sentiment. Central banks, including the Bank of England, are under pressure to maintain high interest rates even as inflation risks rise again due to energy costs.

Markets Brace for More Turmoil

The markets are far from stabilizing. With nuclear talks canceled and both sides promising more retaliation, investors expect more volatility ahead. Israel has warned of new strikes, even deeper inside Iran, while Tehran has said it will escalate unless attacks stop.

This has driven a flight to safety. Gold is climbing, U.S. bond yields are falling, and traders are eyeing emergency scenarios. Manufacturing data and Fed decisions this week will be closely watched—but none of that may matter if the war escalates further.

Markets thrive on stability. Right now, they’re getting the opposite. Energy costs, inflation risks, and geopolitical flashpoints are converging to form a perfect storm.

The Geopolitical Domino Effect on Stocks

The stocks that suffered most are those tied to global growth and trade. Tech and manufacturing led the downturn in the U.S., with similar patterns seen in Europe. Investors are worried that sustained conflict could drag down corporate earnings, disrupt supply chains, and trigger fresh sanctions.

Defense and energy stocks, on the other hand, are rallying. With global leaders bracing for possible involvement—either through diplomacy or force—geopolitics is now a major driver of markets. Every headline from Tehran, Tel Aviv, or Washington moves the needle.

For now, the message is clear: markets are on edge. And with no truce in sight, the volatility may just be getting started.