Markets are bracing for a sharp downturn at the open amid escalating tensions in the Middle East, with a 43-point (0.5%) fall now predicted for the FTSE 100. The decline reflects deepening investor unease following Israeli airstrikes on Iran’s nuclear and military facilities.
Oil majors Shell and BP, two of the largest constituents of the FTSE 100, are expected to benefit from the sharp rise in crude prices following Israel’s airstrikes on Iran. The surge in oil has provided a boost to energy stocks, even as broader market sentiment turns negative.
Elsewhere in Europe, major indices are also bracing for losses. Futures indicate that France’s CAC 40 and Germany’s DAX are both set to open more than 1% lower, as investors react to growing fears of a wider regional conflict in the Middle East.
US stock futures also indicate significant losses, with the Dow Jones, S&P 500, and Nasdaq all down more than 1% in pre-market trading as investors shift away from risk assets and toward traditional havens.
“The news has led to significant fears about an escalation and a wider regional conflict,” Deutsche Bank strategist Jim Reid wrote in his morning note. He highlighted comments from Iran’s armed forces spokesperson warning that Israel and the US would receive a “harsh blow” in response, while Iran’s Supreme Leader promised “severe punishment.”
Oil prices have spiked on the back of the rising geopolitical risk, with Brent crude climbing over 9% to $75.60 per barrel. “If sustained, that would mark the biggest daily gain since May 2020, during the early stages of the post-COVID recovery,” Reid noted. Brent briefly touched an overnight high of $78.50 before easing back.
Asian Markets Slide Amid Escalating Middle East Tensions
Asian markets traded lower this morning as investors reacted to rising geopolitical risks following Israeli airstrikes on Iran.
Japan’s Nikkei dropped 1.1%, while Hong Kong’s Hang Seng fell 0.7%. Meanwhile, China’s Shanghai SSE Composite slipped 0.6%, reflecting broader risk aversion across the region. The declines come as global markets brace for potential fallout from a deepening conflict in the Middle East.
