Global financial markets are in turmoil as President Trump issued an ultimatum to Iran: reopen the Strait of Hormuz by tomorrow, or face the destruction of its civilian energy infrastructure. Tehran has stood firm, vowing to retaliate by targeting energy infrastructure across the Gulf and deploying sea mines, setting the stage for a dramatic escalation.
The heightened geopolitical tension sent equities sharply lower across the board. European stocks plummeted an average of 2%, while both China and Japan saw declines exceeding 3%.
The U.S. dollar appreciated against its main peers, benefiting from safe-haven flows. However, gold, typically a beneficiary in times of crisis, plunged almost 7% to $4,300 an ounce. Speculation in the market suggests that Gulf states, facing immense pressure from the conflict, may be reducing their gold holdings, contributing to the unexpected decline.
Despite the widespread market selloff, Brent crude oil traded flat at $113 a barrel. UBS Group AG CEO Sergio Ermotti weighed in on the energy outlook, stating that he expects oil prices to remain elevated for a prolonged period, underscoring the deep impact of the Mideast crisis on global supply chains.
The coming day is anticipated to be extremely tense, with neither side showing any indication of backing down from their respective positions, leaving markets bracing for further volatility.
In sharp turnaround of events, Trump has announced the suspension of attacks for 5 days after negotiations with Iran, which were denied by the Islamic Republic.
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