Global financial markets are expected to react sharply following the attack on Iran and the escalation of military tensions in the Middle East, with energy prices, safe-haven assets and defence stocks likely to dominate the first wave of market movements when trading resumes.
Oil markets likely to move first
The oil market is typically the most immediate barometer of geopolitical tension in the Middle East. Iran remains a significant oil producer and sits alongside the Strait of Hormuz, a strategic maritime corridor through which roughly one-fifth of the world’s oil supply passes. Any threat to this route immediately reverberates through global energy markets.
Analysts expect crude prices to jump when markets reopen, reflecting fears of supply disruption or retaliation that could affect shipping lanes in the Gulf. Brent crude had already climbed to around $73 per barrel before the latest escalation, with some forecasts suggesting prices could surge toward $100 if the conflict widens.
Energy companies and oil exporters often benefit from such spikes, meaning oil majors and energy-sector ETFs are likely to see short-term gains.
Equities may face early sell-off
Broader stock markets tend to react negatively to sudden geopolitical shocks. Investors typically reduce exposure to risk assets such as equities when uncertainty rises sharply.
Strategists expect major indices in the United States, Europe and Asia to open lower as investors digest the geopolitical implications of the conflict. Airline stocks, shipping companies and sectors sensitive to fuel costs could face the largest pressure if oil prices surge significantly.
However, historical data shows that equity markets often stabilise relatively quickly unless the conflict leads to a prolonged disruption of global trade or energy supply.
Safe-haven assets expected to surge
Periods of geopolitical instability usually trigger a rapid move into so-called safe-haven assets. Gold, US Treasury bonds and the US dollar are the primary beneficiaries of this shift.
Gold prices are already expected to open higher as investors seek protection against volatility and inflation risks linked to rising oil prices. In extreme scenarios, analysts suggest gold could approach new record levels if the conflict escalates further.
Government bonds could also attract demand as investors move away from riskier assets.
Inflation concerns return to the spotlight
One of the most significant economic consequences of an extended Middle East conflict would be the inflationary impact of higher energy prices. A sustained oil rally could push fuel and transport costs higher worldwide.
This dynamic could complicate central bank policy, particularly in the United States and Europe, where policymakers are already balancing inflation risks with slowing economic growth. Higher oil prices could delay expected interest-rate cuts and tighten financial conditions globally.
Long-term impact depends on escalation
Despite the immediate shock, financial historians note that geopolitical conflicts often cause only temporary market disruptions unless they lead to prolonged supply shocks or major economic dislocation.
The key variable for investors will be whether the confrontation spreads across the region, particularly if energy infrastructure or shipping routes become direct targets.
For now, markets appear poised for a volatile start to the trading week, with oil, gold and defence stocks likely to lead the initial reaction.
Newshub Editorial in Global Markets — March 1, 2026
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