
Markets saw a highly volatile session on Monday, with major US indices initially plunging on conflict fears but later rebounded sharply. The S&P 500 finished 0.8% higher, the Nasdaq 100 gained 1%, and the Dow closed 0.7% higher after being down almost 600 points earlier in the day.
The rebound was driven by dip-buying, particularly in defense, energy, and technology stocks. However, in early trading today, S&P 500 futures declined, with the index down 0.75%, Nasdaq 100 futures falling 0.8%, and Dow futures falling 0.6%, as investors reacted to escalating geopolitical tensions between the U.S. and Iran.
Meanwhile, oil prices surged amid fears that the conflict could disrupt global energy infrastructure and shipments, especially after reports that Iran had closed the Strait of Hormuz, a key route for global crude flows that handles roughly 30% of global seaborne crude.
Oil prices have already surged nearly 10% since the conflict began, with Brent crude around $80 per barrel and WTI breaking $73. Investors are now balancing geopolitical risks, inflation concerns from rising oil prices, and upcoming corporate earnings.
Gold extended its gains for a third consecutive day, trading above $5,400 on Monday as escalating tensions boosted safe-haven demand. However, the precious metal remains capped below the $5,400 level as a firm U.S. dollar, supported by reduced expectations for aggressive Federal Reserve rate cuts, limits further upside.
The EURUSD pair extended its decline to around 1.1660 during early Asian trading, marking its lowest level since late January, as the U.S. dollar strengthened on rising geopolitical tensions. The greenback attracted safe-haven flows after the U.S. and Israel reportedly struck thousands of targets inside Iran. U.S. officials also warned of a significant escalation in attacks over the next 24 hours, further intensifying market anxiety.
On the macro front, investors are awaiting the Eurozone’s preliminary Harmonized Index of Consumer Prices (HICP) data for fresh direction. While the European Central Bank is expected to keep interest rates unchanged through at least mid-2026.
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