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Markets worldwide reeled on Friday following Israel’s targeted strikes on Iran’s nuclear and missile infrastructure, reigniting geopolitical tensions in the oil-rich Middle East. The military escalation triggered a sharp selloff in equities and a simultaneous flight to safety, with oil, gold, and the U.S. dollar sharply higher.
Oil Prices Spike on Supply Fears
Brent crude surged over 7% to $74.39 per barrel, after briefly rising as much as 14% during Asian trading. This marks the largest one-day gain since the early days of the Russia-Ukraine conflict in 2022. U.S. crude followed suit, climbing 7.57% to approximately $73. The spike underscores investor concern over potential supply disruptions in an already fragile global energy market.
Flight to Safety Lifts Gold and Dollar
As risk aversion took hold, gold prices advanced 1.4% to $3,432 per ounce, nearing April’s record high. The U.S. dollar also rebounded, with the dollar index up 0.5% to 98.16. Treasuries saw a modest selloff as bond markets wrestled with the twin forces of inflation concerns and safe-haven demand—pushing 10-year yields to 4.436% from a one-month low.
Equity Markets Retreat
Major U.S. indices tumbled: the Dow Jones Industrial Average dropped 1.65%, the S&P 500 fell 0.86%, and the Nasdaq declined 0.9%. The selloff was mirrored globally, with European and Asian equities down across the board. The STOXX Europe 600 dipped 0.9%, and bourses in Japan, South Korea, and Hong Kong all lost over 1%.
Strategic Outlook
While the immediate market response reflects heightened geopolitical anxiety, some strategists see this as a longer-term buying opportunity, especially in U.S. large-cap stocks and commodity-linked assets.
“The resurgence of conflict in the Middle East introduces fresh volatility,” said Sameer Samana, Head of Global Equities and Real Assets at Wells Fargo Investment Institute. “But for long-term investors, this pullback could offer strategic entry points.”
Looking Ahead
As markets digest the implications of Israel’s military operation and await further developments, the focus will remain on energy markets, inflationary pressures, and central bank policy responses. The Federal Reserve, in particular, could face renewed challenges if oil-driven inflation complicates the monetary tightening trajectory.
