World markets are reeling after the US and Israel attacked Iran over the weekend and killed Supreme Leader Ali Khamenei, disrupting international trade and travel and raising the risk of a prolonged conflict that has sweeping commercial and economic effects.
Here’s a rundown of where major assets stood at 8:00 a.m. ET on Monday:
Oil and gas
Brent oil, the international benchmark, was trading around 8% higher at $78.49 a barrel, while US crude prices were up 6% at nearly $71.35 a barrel.
Crude prices initially spiked more than 12% when markets opened on Sunday evening in the US, and were further fueled by news that Saudi Aramco halted operations at its Ras Tanura refinery in Saudi Arabia after a drone strike.
Natural gas prices also jumped on Monday, after Qatar announced it would halt production at its Ras Laffan Industrial City plant, the world’s largest liquefied natural gas plant, following Iranian strikes.
Stocks
US stocks tumbled, but pared the deepest losses as traders digested the conflict.
Notable winners in the market included shares of defense giants Lockheed Martin and RTX, as well as oil majors Exxon Mobil and Chevron. Shares of travel stocks, meanwhile, tumbled as the outlook for global tourism dimmed. Airline, hotel, and cruise stocks all fell.
Here’s where major US stock indexes stood around 10:50 a.m. ET on Monday:
S&P 500: 6,858.25, down 0.3%
Dow Jones Industrial Average: 48,774.81, down 0.4% (-203.11 points)
Nasdaq Composite: 22,644.03, down 0.16%
European stocks slumped as investors cut their exposure to travel-related and consumer stocks while wagering that defense and energy companies would benefit from military escalation.
Britain’s FTSE 100 slid by only 1% or so thanks to its high concentration of energy, mining, and defense companies. Asian equities fell on Monday, with Japan’s Nikkei 225 closing 1.4% lower and Hong Kong’s Hang Seng ending the day 2.1% lower.
Metals
Gold rose about 2% to around $5,352 per troy ounce. Geopolitical conflict has been part of the bull case for gold in the last year and a key driver of its record-setting hot streak. Analysts say a new war in the Middle East could fuel even greater gains, with commentators on Monday eyeing $6,000 an ounce in the coming months.
Silver gained about 2% to trade around $95, while platinum slid 1% to around $2,350. Copper was down 0.5% at about $6.
Crypto
Bitcoin initially tumbled in line with stocks and other risk assets, but regained ground to trade at around $66,000.
Ether, Ripple, and Solana dipped to about $1,934, $1.34 each, and $83.30 each.
US dollar
The dollar index, which measures the currency against a basket of major rivals, was up 0.9%.
“The first order reaction to the weekend’s escalation will likely see the dollar benefit on the back of higher energy prices and elevated risk aversion,” Barclays analysts wrote on Saturday after the first attacks.
What’s behind the market moves
Energy traders are preparing for the possibility that the Strait of Hormuz, a critical shipping route for global energy commodities, is closed for an extended period.
“The immediate price shocks are being accompanied by a fresh wave of supply chain disruptions. This isn’t just a question of whether the Straits of Hormuz are physically closed; the logistical friction is already here,” economist Mohamed El-Erian wrote on Substack, pointing to insurance costs, maritime cargo, and aviation as having already been significantly impacted.
Barclays analysts on Saturday described the situation as realizing the “worst fears” for oil. Analysts on Sunday said other energy commodities were also at high risk of repricing.
“Qatar has the world’s third-largest LNG export capacity, and ~20% of global LNG trade transits the Strait of Hormuz (primarily Qatari volumes), which makes shipping risk a gas-market event as much as an oil-market event,” strategists at Franklin Templeton wrote on Sunday.
They described the Strait of Hormuz as “the macro circuit breaker,” and noted that global shipping costs had already risen in the day after the initial attacks.
Higher oil prices risk stoking inflation, and analysts have flagged in the aftermath of other recent conflicts that a sudden spike in energy prices could also tip the global economy into a recession.
Analysts noted on Sunday evening that markets currently perceive a low risk that the war will drag on for a long time or spill into a wider regional conflict.
“Broader uncertainty suppresses investor sentiment, which can broadly weigh on risk-assets globally,” Adam Hetts, the global head of multi-asset at Janus Henderson, said on Sunday. “This would likely make global developed market sovereigns, including US Treasuries, and safe-haven currencies more attractive.”
Hetts added that in a prolonged period of uncertainty, higher oil prices could spark a global inflation scare, which might slash the likelihood of rate cuts by the Federal Reserve this year.
Risk-off, but no panic selling
Chris Weston, the head of research at Pepperstone, said the overall tone in markets was risk-off. He added that price moves across asset classes remained relatively contained and did not reflect panic-driven selling.
“The cross-asset moves are orderly, and the more outsized volatility appears largely contained to the energy complex,” he wrote on Sunday evening.
Within energy markets, Brent crude’s inability to sustain a move above $80 a barrel indicates that traders may have already priced in a meaningful supply disruption, he added.
Higher output quotas from OPEC+ could also be helping to limit further upside in oil prices, he added, referring to the oil-producing group’s plan to boost crude oil output by 206,000 barrels per day from April.
Paul Eitelman, the global chief investment strategist at Russell Investments, said investors should keep the broader macro backdrop in mind as markets process the latest developments.
That’s largely because the US energy picture looks dramatically different from what it did decades ago. The US is now the world’s largest oil and gas producer and a net exporter. Meanwhile, gasoline makes up about 2% of total consumer spending in the US — a fraction of its share during the oil shock era of the 1970s through the 1990s.
“Oil shocks are less important to global markets than they were decades ago. At this time, we believe the strikes are unlikely to derail global fundamentals,” Eitelman said.
