Live updates: Follow the latest news on US-Iran war
Global stock markets were lower on Thursday, as investors continued to fret about the uncertainty over the US and Israel's war against Iran that is about to enter its fourth week with no end in sight.
Stock markets, which fell for a second week last Friday, which have escalated as both sides have begun targeting key infrastructure – specifically, energy facilities, disrupting the global energy sector.
Investor unease deepened after Abbas Araghchi, Iran’s Foreign Minister, warned of further escalation. “Our response to Israel's attack on our infrastructure employed a fraction of our power,” he said in a post on X. “The only reason for restraint was respect for requested de-escalation. Zero restraint if our infrastructures are struck again. Any end to this war must address damage to our civilian sites.”
The statement underscored the risk of a broader conflict and added to volatility across asset classes.
Recent signals from the US Federal Reserve and other central banks have already highlighted a willingness to keep borrowing costs elevated for longer. The latest jump in oil prices has reinforced that outlook, with markets reassessing the timing and extent of any easing cycle.
“The implications of developments in the Middle East for the US economy are uncertain,” Fed chairman Jerome Powell said.
The combination of geopolitical risk and a more hawkish policy environment is creating a challenging backdrop for worldwide markets. Rising energy prices threaten to add to inflationary pressures while also burdening economic growth, leaving policymakers with limited room to respond.
Investors are now bracing for prolonged volatility, as developments in the Middle East remain the dominant driver of market sentiment.
Wall Street opened down at the opening bell, with the Dow Jones Industrial Average shedding 0.2 per cent, the S&P 500 declining 0.63 per cent and the tech-rich Nasdaq Composite sliding 1.27 per cent.
In Europe, major bourses fell sharply, with London's FTSE 100 retreating nearly 2 per cent, as investors shied away from riskier assets.
Investors are also awaiting the Bank of England's decision on interest rates. The Fed left interest rates unchanged for a second meeting in a row on Wednesday, as the Iran war's effect on oil prices complicates the way forward. The European Central Bank is also due to announce its decision.
Frankfurt's DAX slid almost 3 per cent, while the CAC 40 in Paris dropped 2.3 per cent.
Earlier, in Asia, investors also moved away from riskier assets, with stocks in China slipping to six-week lows as they tracked developments in the war and its effects on world economies.
The Shanghai Composite ended 1.4 per cent lower, while Hong Kong's Hang Seng declined 2 per cent. Japan's Nikkei, after rising 3 per cent on Wednesday, swung to a 3.4 per cent loss at the close on Thursday.
In commodities, oil prices remain elevated. Brent was up 3.47 per cent at $111.10 per barrel and West Texas Intermediate added 0.62 per cent to $96.92 a barrel at 6.05pm UAE time.
The surge in oil prices has also shifted expectations for monetary policy, with investors scaling back bets on near-term interest rate cuts. Higher energy costs risk feeding into inflation, potentially forcing central banks to maintain a more cautious stance.
Gold and silver, meanwhile, continued their decline from recent highs. They were down 5.3 per cent to $4,630.75 and nearly 10 per cent to $70.06 per cent an ounce, respectively.
