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Global markets opened Monday with investors’ appetite for risk waning, as renewed military tensions between the United States and Iran reignited geopolitical concerns, prompting investors to reduce their exposure to riskier assets at the start of the week. Dow Jones futures fell 0.5% , while S&P 500 futures declined 0.7% , with technology stocks leading the losses, dragging Nasdaq futures down by about 1.5% .
These moves came after Tehran announced it had carried out attacks targeting US facilities in a number of Gulf states, in addition to announcing the closure of the Strait of Hormuz , while US President Donald Trump confirmed that the shipping lane remained open to commercial vessels, which increased the uncertainty surrounding the developments of the crisis.
Oil rises as Asian markets decline sharply
Fears of potential energy supply disruptions have driven oil prices sharply higher, with Brent crude climbing nearly 4% to close at $79 a barrel , while West Texas Intermediate (WTI) rose more than 3% to around $74 a barrel . Investors worry that continued high oil prices could exacerbate global inflationary pressures, potentially complicating central banks’ efforts to lower interest rates in the near future.
The sell-off extended to Asian markets, with South Korea’s Kospi index plunging more than 9% to below 7,000 points , its lowest level since early May, while the Kosdaq fell 2% and Japan’s Nikkei 225 index declined by about 1.7% . This performance reflects what is known in the markets as a risk-off market, where investors are reducing their holdings in stocks and high-risk assets amid escalating geopolitical uncertainty.
A week packed with results and inflation data.
Despite political tensions dominating market movements, investors are gearing up for a busy week of economic events as the second-quarter earnings season kicks off for US companies. A host of the largest US financial institutions, including JPMorgan Chase , Goldman Sachs , Morgan Stanley , Bank of America , Citigroup , and Wells Fargo , are expected to release their financial results in the coming days, along with major companies such as Netflix , Johnson & Johnson , and UnitedHealth .
Analysts predict that S&P 500 companies will see their earnings grow by more than 25% year-on-year in the second quarter, presenting a significant challenge for US companies to justify their recent high valuations. Markets are also awaiting the release of the US Consumer Price Index (CPI) for June on Tuesday, a key economic indicator this month due to its direct impact on expectations surrounding the Federal Reserve’s monetary policy.
Analysts believe that markets will remain hostage to two main factors in the coming days: first, developments in the crisis between the United States and Iran, and second, corporate earnings and inflation data, which will largely determine the direction of US stocks during the second half of the year.
