Overview
- U.S. Central Command said it carried out strikes on targets inside Iran intended to reduce Tehran’s ability to hit commercial ships in the Strait of Hormuz, a move that triggered immediate market moves.
- Oil jumped sharply after the escalation, with Brent rising toward the mid-$70s then into the $80s and U.S. WTI climbing similarly as traders priced higher supply risk from Gulf shipping routes.
- Asian stock markets fell heavily on the shock, led by South Korea where the KOSPI dropped about 5.6 percent and major tech firms such as SK Hynix and Samsung suffered double- and single-digit losses respectively.
- Markets moved into safer assets and the dollar strengthened, and traders increased the probability of more U.S. rate hikes with CME FedWatch showing roughly a 52 percent chance of two or more hikes by December.
- The Strait of Hormuz’s role as a key oil chokepoint means sustained fighting could push fuel costs and consumer prices higher, so investors and policymakers will watch Kevin Warsh’s testimony and upcoming U.S. inflation and retail reports for signals on policy and market direction.