This time on either side US – Iran strikes They didn't just try the deal. They finished it. This at least Donald Trump tweeted sparking strong turbulence in the markets.
Within hours, investors abandoned the most risky assets, oil ejected over 5%, and the performances of state bonds followed again the gap as markets again began to assess the risk of a prolonged geopolitical shock in the Middle East.
Oil Rally
The most immediate reaction was recorded in the energy market.
The Brent Note intra-session rise of over 6%, exceeding $78 a barrel, while the American slow WTI was boosted by 5.25%, at $74.14.
Although prices remain well below levels above $120 recorded at peak of war, analysts point out that the market is now restoring the so-called geopolitical premium, i.e. the additional risk premium associated with potential supply disruptions.
Liquidations in stock markets
The return of geopolitical risk led to massive liquidations in the stock exchanges.
The EU-wide STOXX 600 index yielded about 1.6%, recording the largest daily drop since mid-March. In Athens climate is even heavier, with the General Index retreating more than 3%.
Wall Street futures also moved lower, with losses from 0.8% to 1.2%, while the VIX variability index, known as «fear indicator», has risen almost 13%, the largest in recent weeks.
The negative climate was also exacerbated by concerns surrounding the valuations of artificial intelligence and semiconductor companies. Samsung retreated for a second successive meeting, despite a spectacular increase in its profitability, as investors worry that demand for AI memories may slow down in the second half.
Bonds and inflation
The new rise in oil also revived fears of inflation, re-targeting bonds, with their prices retreating and returns rising.
The U.S. 10-year bond yield rose to 4.56%, at the highest level of the last month, while the yields of European state titles also rose upward. German 10-years sees its performance at 3.06% and Italian at 3.90%. Greek 10-year performance climbed to 3.8%.
Investors fear that a sustained rise in energy prices will make the work of central banks, which are attempting to de-escalate inflation difficult without leading economies to recession.
The look at Ormuz
The main question now concerns not only military developments, but whether the world's most important energy passage will remain open.
From the Straits of Ormuz, about a fifth of the world's oil supply passes through, meaning that even limited disruptions in tanker traffic can cause severe turbulence in international markets.
Information that tankers are now avoiding transit through the region, combined with the reduction of American strategic oil reserves to lower levels since 1983, enhances the feeling that the market is more exposed to a new shock of supply.
For investors, the message is clear: as long as the crisis in the Middle East remains open, geopolitical risk returns to the focus of markets, affecting not only oil, but all investment decisions.
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