22.06.2025 13:49
Global markets brace for a tumultuous week following a weekend escalation in the Middle East. Uncertainty reigns supreme as investors anticipate a significant market downturn when US stock exchanges open on Monday. The US attack on Iranian targets has ignited fears of a wider conflict, triggering a surge in global oil prices.
This unexpected development is poised to heavily influence global equity markets, amplified by concerns regarding Iranian retaliation and escalating energy costs. The unfolding crisis in the Middle East will undeniably dominate trading activity throughout the week, according to reports from Reuters. Consequently, data releases concerning US business activity, housing sales, and inflation are expected to receive comparatively less attention.
Investor focus is sharply directed towards President Trump's decision to support Israel's military action against Iran, analyzing its potential impact on market sentiment, inflationary pressures, and the Federal Reserve's policy decisions, particularly regarding interest rate cuts later in the year. President Trump himself declared the strike a resounding military victory, claiming the destruction of Iranian nuclear enrichment facilities. However, he issued a stark warning of further US military action should Iran fail to comply with peaceful resolutions.
Iran swiftly responded, asserting its right to utilize all available options for self-defense. Furthermore, the Iranian parliament approved a measure to close the Strait of Hormuz, a strategically vital waterway responsible for transporting approximately 20% of the world's oil supply, as reported by Reuters, citing the state-run Press TV. This action dramatically increases the likelihood of a significant oil price shock impacting global markets.
The potential market consequences are substantial, as noted by Steve Sosnick, chief market strategist at Interactive Brokers. He highlighted the unpredictability of the market's response, emphasizing that the primary concerns involve indirect effects: oil price fluctuations, overall market stability, and subsequent price increases across the global economy. While acknowledging that no major global company is directly affected by the recent events, the ripple effect is anticipated to be significant. The S&P 500, recently near February highs before this development, is expected to be greatly impacted.
