Global markets woke up to a jolt on Friday after Israeli forces carried out overnight airstrikes on Iran, targeting key nuclear and military sites. The strikes, confirmed by Israeli Prime Minister Benjamin Netanyahu, were aimed at Iran’s nuclear enrichment and weaponization programs, as well as high-ranking military and scientific leaders. Among those reportedly killed were Major General Mohammad Bagheri, IRGC Commander Hossein Salami, and prominent nuclear scientist Fereydoon Abbasi, marking a significant escalation in the region’s long-simmering tensions.
The immediate market response was swift and severe. The Dow Jones Industrial Average (DJIA) plunged over 650 points in early trading, reflecting investor anxiety about the potential for broader conflict and its impact on the global economy. While a drop of this magnitude is rare, it’s a clear signal that traders are bracing for volatility as the situation develops. The selloff was compounded by weakness in major tech names and a sharp decline in Boeing shares following unrelated news of an Air India crash, but the geopolitical shock was the dominant driver.
Energy markets were equally turbulent. Oil prices surged to an intraday high of $77.60 as news of the Israeli strikes broke, with traders fearing that renewed conflict in the Middle East could disrupt supplies from one of the world’s most critical energy corridors. However, as the trading day progressed and some of the initial panic subsided, oil prices retreated from their peak.
This kind of price action isn’t unusual when Middle East tensions flare. The market’s initial reaction is often a knee-jerk spike, followed by a reassessment as more information becomes available. Still, the fact that oil reached its highest level in over two months underscores just how sensitive prices are to even the threat of conflict in the region.
Gold, meanwhile, did what it usually does in times of crisis: it soared. The precious metal hit an intraday high of $3,468 before giving up some gains as the day wore on. Investors often flock to gold as a safe haven when geopolitical risks rise, and today was no exception. The spike reflects not just fear of instability in the Middle East, but also broader concerns about inflation and the potential for further market turmoil if the conflict escalates.
The situation remains fluid. Iran has vowed to respond, and while details of any immediate retaliation are still emerging, the risk of a broader regional conflict is real. Markets are likely to remain on edge until there’s more clarity about whether this is the start of a sustained campaign or a one-off strike. The U.S. has signaled it will not provide offensive support for Israel’s operation, but with nuclear negotiations ongoing and the potential for further escalation, investors should expect continued volatility.
For traders and investors, the message is clear: geopolitical risk is back at the forefront, and the old playbook of buying oil and gold in times of crisis still applies. But as today’s reversals in both markets show, these moves can be sharp and short-lived.
With the DJIA down sharply, oil and gold both swinging wildly, and the world watching for Iran’s next move, today’s events are a stark reminder of how quickly geopolitics can upend financial markets.
