Quick overview

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Global markets began the week with strong signs of financial panic amid uncertainty sparked by the war in the Middle East and growing fears among investors that the conflict involving Iran could last longer than originally suggested by Donald Trump.

Stock markets around the world turned sharply lower early in the session, although Wall Street managed to rebound toward the close while oil prices collapsed after extreme volatility.

Asian markets were the first to react. The situation raised particular concern in Japan — the world’s fourth-largest economy and the fifth-largest oil importer — which relies on the Middle East for nearly 95% of its crude supply.

Japan’s Nikkei 225 plunged 5.2%, reflecting investor anxiety over the risk of an escalation and its potential impact on global energy supplies.

In response, Japanese Prime Minister Sanae Takaichi said the country holds strategic oil reserves equivalent to about 254 days of domestic consumption. According to Kyodo News, the government is considering releasing part of those reserves to stabilize the market.

Energy dependence also weighed on South Korea, the world’s fourth-largest oil importer. The KOSPI in Seoul closed down 6%.

The negative tone extended to China, which remains the world’s largest crude buyer. The Shanghai Composite and Hong Kong’s Hang Seng Index fell 0.7% and 1.4%, respectively.

Other market signals

The cautious mood also spread to U.S. markets, although sentiment improved late in the session. The S&P 500 rose 0.8%, while the tech-heavy Nasdaq Composite advanced 1.4%. The Dow Jones Industrial Average gained 0.5%.

In Europe, the Euro Stoxx 50 slipped 0.5%. Losses were widespread: Germany’s DAX dropped 0.8% and France’s CAC 40 fell 1%. Outside the eurozone, the UK’s FTSE 100 declined 0.34%.

Commodities: oil briefly surged above $100

Energy markets experienced extreme swings. West Texas Intermediate crude initially surged as much as 25.17% before reversing sharply and plunging more than 20% to around $82.84 per barrel, after briefly reaching its highest level since June 2022 during Russia’s invasion of Ukraine.

Similarly, Brent Crude jumped as much as 24.29% amid fears of disruptions to oil production and shipping routes. After reversing course, the North Sea benchmark settled at $87.38 per barrel, down 19.3% on the day.