Stocks Slide and Dollar Gains as Markets React to Iran Conflict

Global stocks fell on Tuesday while the U.S. dollar strengthened as investors weighed the economic impact of American and Israeli strikes on Iran and the potential disruption to energy markets.

MSCI’s Asia-Pacific index excluding Japan dropped 1.5% for a second straight day, with South Korean shares falling as much as 4.1%. Japan’s Nikkei 225 slid 2.3%, while S&P 500 futures lost 0.6%.

Rupal Agarwal, Asia quantitative strategist at Bernstein, said geopolitical tensions are adding to already elevated economic policy uncertainty, recalling a similar situation during the Russia-Ukraine war in 2022 that weighed on Asian markets.

Oil prices continued rising after Monday’s surge, with Brent crude climbing 2% to $79.22 per barrel. Shipping costs also jumped, with the price of chartering a supertanker from the Middle East to China exceeding $400,000 per day after Iran threatened to close the Strait of Hormuz.

Higher energy prices could increase costs for Asian companies and pressure profits. Analysts at Goldman Sachs estimate that a 20% rise in Brent could reduce regional earnings by around 2%, depending on how long the conflict lasts.

The U.S. dollar index hovered near a six-week high as investors sought safe-haven assets. Meanwhile, gold rose 0.6% to $5,358 an ounce, while bitcoin and ether both fell about 1.5%.

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