Global stock markets plummeted and government bonds rallied Tuesday as a widening Middle East conflict sent oil prices sharply higher, intensifying investor worries about inflation. U.S. crude oil prices jumped more than 7 percent, alongside Brent crude, as the conflict escalated with attacks on energy infrastructure and key shipping lanes.
Wall Street indexes fell nearly 2 percent, following significant losses in European and Asian markets. Analysts cited concerns the U.S. is being drawn deeper into the conflict, with the closure of the Strait of Hormuz and increased regional instability posing risks to global energy supply. Rising oil prices, while boosting energy stocks, are seen as a negative for the broader global economy and complicate the Federal Reserve's inflation control efforts.
In currency markets, the U.S. dollar climbed to multi-month peaks against the euro, sterling, and yen, as the Middle East conflict spurred demand for safe-haven assets and fueled expectations of prolonged global inflation. Bitcoin also saw a decline, falling 1.35 percent.