Global stock markets experienced significant declines on Tuesday as a widening conflict in the Middle East ignited inflation fears. Oil futures surged over 4 percent, reaching their highest levels since 2024, after disruptions in the Strait of Hormuz, a key oil transit route. U.S. President Donald Trump cited intelligence of an impending Iranian attack, while Israel stated it struck an Iranian compound involved in nuclear weapons development.
Wall Street indexes pared earlier losses, closing down less than 1 percent. European stocks fell over 3 percent, and the MSCI Asia Pacific index dropped 3.5 percent, with South Korea's KOSPI leading declines with a 7.2 percent drop. Analysts noted the disproportionate impact on oil-importing countries like those in Europe.
U.S. crude oil prices settled up 4.7 percent at $74.56 per barrel, and Brent crude rose 4.71 percent to $81.40 per barrel. The U.S. dollar strengthened against the euro, sterling, and yen, driven by safe-haven demand and expectations of prolonged global inflation. The dollar index rose 0.47 percent to 98.98.
The surge in energy prices complicates the Federal Reserve's efforts to control inflation. U.S. Treasury yields showed muted movement, with the benchmark 10-year note yield unchanged at 4.052 percent. Bitcoin fell 1.03 percent to $68,716.79.
Gold prices declined as the dollar strengthened and inflation concerns intensified, reducing prospects for an interest rate cut. Spot gold fell 3.79 percent to $5,125.00 an ounce, and spot silver dropped 6.3 percent to $83.80 an ounce.