Renewed military strikes in the Middle East sent global equity markets lower on Friday while crude prices surged, stoking fresh inflation fears and disrupting supply chains. The attacks, which escalated overnight, pushed the S&P 500 and the STOXX 600 into the red for the third straight session, with energy and transport sectors taking the heaviest hits. Crypto markets, by contrast, showed signs of mixed resilience—bitcoin edged higher in early trading while smaller altcoins gave back gains.
Markets in retreat
Major indices across Asia, Europe, and the U.S. opened sharply lower. The Dow Jones Industrial Average fell more than 400 points in the first hour of trading. European bourses followed suit, with the German DAX and French CAC 40 each dropping over 2%. The sell-off accelerated as traders priced in the risk of a prolonged conflict. Volatility gauges spiked, with the VIX climbing above 30 for the first time since last year's regional flare-up.
Oil's sharp climb
Brent crude jumped past $95 a barrel, its highest level in months, as the attacks threaten key chokepoints in the Strait of Hormuz. The spike immediately hit airline and shipping stocks, which shed as much as 5%. Supply chains already under pressure from previous disruptions now face new delays, particularly for raw materials routed through the Gulf.
Inflation on watch
The oil surge reignited inflation worries. Central banks in Europe and the U.S. have been tiptoeing toward rate cuts, but a sustained energy price rise could force them to hold steady longer. The European Central Bank's June meeting now looks even more uncertain. Some economists expect the Fed to signal a pause at its next meeting if the crisis deepens.
Crypto's mixed resilience
Bitcoin hovered around $68,000, up about 1.5% on the day, suggesting some investors are treating it as a geopolitical hedge. But Ethereum slipped 0.8%, and most smaller coins tracked lower. The divergence highlights a market still trying to find its footing amid macro shocks. Trading volumes on major exchanges jumped roughly 20% as the news broke, indicating heightened activity but no clear directional consensus.
The immediate question for traders is whether the attacks escalate further over the weekend. Any move to block commercial shipping in the Gulf would push oil even higher and likely trigger another broad sell-off on Monday. For now, markets are bracing for more volatility with no diplomatic resolution in sight.
