The US bombed three Iranian nuclear facilities on Sunday, prompting Iran to retaliate with limited strikes against a US air base in Qatar. The response from the markets was unexpected, with oil prices plummeting 7% instead of rising as expected.
Traders had anticipated a traditional “risk-off” reaction, characterized by selling stocks and higher oil prices. However, as the day progressed, stock prices began to recover, and oil prices stabilized before the US equity market opened.
Experts attribute this unexpected move to Iran’s measured response, which was seen as less aggressive than expected. According to Lou Brien, economic strategist at DWR Holdings, Iran’s retaliation was primarily driven by a desire to “save face” rather than engage in a full-scale conflict.
The situation remains uncertain, with investors pricing in geopolitical risks and the possibility of further escalation. US President Donald Trump has raised the prospect of “regime change,” which could lead to increased military involvement and disruptions to global oil supplies.
The economic stakes are high, with inflation and growth potential affected by any disruption to the global oil supply. Investors remain vigilant as new developments arise, and a negative market panic hasn’t taken hold yet, but the US strikes have created uncertainty and raised additional risks.
Source: https://www.businessinsider.com/why-markets-calm-us-iran-nuclear-conflict-military-stocks-2025-6