Middle East Tensions Spark Market Plunge as Oil Prices Surge

Middle Eastern tensions flared over the weekend, triggering a significant downturn in global stock markets. Reports indicate the U.S. launched a new wave of strikes against targets in Iran, aiming to curb its ability to disrupt shipping in the Strait of Hormuz. Iran responded with missile and drone attacks on U.S. military bases in Jordan, Bahrain, Kuwait, and Qatar.

Adding to the instability, Iran declared the Strait of Hormuz closed indefinitely. However, U.S. representatives assert that maritime traffic continues along the southern route near Oman's coast. Shipping data from "Bloomberg" reveals a substantial decrease in vessel traffic through the strait over the past three days, nearing levels seen before a peace memorandum was signed.

The resurgence of military actions sent "Brent" crude oil prices up by approximately 4% on Monday, exceeding $79 per barrel. TTF gas prices also rose 3%, surpassing 50 euros per megawatt-hour. These rising energy costs heighten inflation risks, increasing the likelihood of central banks responding with interest rate hikes. Consequently, bond yields in many countries climbed on Monday due to the prospect of higher interest rates.

Stock markets experienced a notable decline, exacerbated by uncertainty surrounding the valuations of artificial intelligence companies that had shown rapid growth in recent months. The South Korean KOSPI fell about 9% during the Asian trading session, while Japan's NIKKEI dropped over 2%. Futures trading suggests European and U.S. markets are also expected to open in negative territory on Monday. On Friday, markets had shown cautious optimism, anticipating a return to diplomacy between the U.S. and Iran. The NASDAQ rose 0.29% and the S&P 500 gained 0.42%. The materials sector (+1.1%) performed best, followed by communication services (+0.9%) and consumer discretionary (+0.9%). The healthcare sector (-0.8%) was the only one to post a negative result. Nvidia (+4%) saw gains following news of potential U.S. government plans to ease chip export restrictions, which could allow sales to the United Arab Emirates. Separately, Apple filed a lawsuit against OpenAI on Friday, accusing the ChatGPT developer of stealing trade secrets and systematically misappropriating Apple's intellectual property to develop its own AI-focused consumer electronics.