Global markets remained on edge Wednesday as escalating conflict between Israel and Iran entered its sixth day, fueling fears of deeper U.S. military involvement. President Donald Trump’s stern warning to Iran and demand for unconditional surrender heightened uncertainty, prompting investors to flee riskier assets. Market analysts noted that the risk of an expanded conflict has become a central concern, with oil prices continuing their sharp ascent in response.
Brent crude and U.S. oil futures both extended gains following more than 4% jumps earlier in the week, highlighting fears of supply disruptions. The geopolitical unease kept investors cautious, weighing heavily on equities in Asia and Europe. Futures for the S&P 500 and Nasdaq showed minor gains, but the mood remained subdued after Wall Street’s decline on Tuesday.
Currency markets reflected a flight to safety, with the dollar holding strong. The euro and yen struggled under pressure, especially due to the energy import dependence of Europe and Japan. The dollar’s status as a haven asset has been reinforced amid the turmoil, as traders temporarily shift focus from U.S.-specific risks to broader global instability.
The Federal Reserve’s policy meeting, set for later Wednesday, adds another layer of uncertainty. Investors widely expect the Fed to hold interest rates steady, but all eyes will be on its updated economic projections. Weak U.S. retail sales data and persistent inflation concerns have complicated the central bank’s decision-making, especially against the backdrop of geopolitical unrest.
Meanwhile, safe-haven assets like gold and U.S. Treasury bonds saw increased demand. The benchmark 10-year Treasury yield dipped as investors sought shelter, reflecting ongoing anxiety. As markets await the Fed’s verdict, the combined stress of economic fragility and war risks continues to rattle investor confidence globally.
Source: Reuters