Global stock markets experienced a downturn, and oil prices increased significantly following Israel's military strike on Iran on Thursday. This event has triggered a wave of reactions across international markets, signaling potential economic instability.
In the U.S., S&P 500 futures fell by 1.1% to 5,984, while Dow Jones Industrial Average and Nasdaq Composite futures dropped by 1.1% and 1.4%, respectively, before trading began. U.S. benchmark crude oil jumped 7.3% to $72.91 per barrel, and Brent crude rose 6.7% to $74.15 per barrel.
Overnight trading saw declines in Asian and European markets. Tokyo's Nikkei 225 fell 0.9%, the Kospi in Seoul lost 0.9%, Hong Kong's Hang Seng retreated 0.6%, Shanghai Composite Index sank 0.8%, and Australia's S&P/ASX 200 dipped 0.2%. Germany's DAX dropped 1.4%, France's CAC 40 shed 1%, and Britain's FTSE 100 slipped 0.5%.
The attack involved airstrikes on Iranian nuclear facilities, scientists, and military commanders. Iran responded by firing over 100 drones at Israel. Analysts suggest that higher oil prices are the primary channel through which this escalation could affect the global economy.
While there was no direct impact on oil production or export facilities in Iran, the risk of Iran blocking the Strait of Hormuz looms. A sustained increase in global energy prices could reverse U.S. progress in lowering inflation.
The Consumer Price Index rose 2.4% in May on an annual basis. This is cooler than analysts expected, as energy costs eased. The Federal Reserve's annual target is 2%.