Global Markets Plunge as Iran-US War Escalates, Oil Surges Past $110
Stocks rout deepens, bonds yields spike, and gold loses safe-haven status as Trump’s 48-hour Hormuz ultimatum fuels rate-hike bets
KASHMIR — March 23, 2026 — Global financial markets were in turmoil on Monday as the escalating conflict between the United States and Iran entered its fourth week, with investors abandoning stocks and traditional safe-haven assets amid fears of prolonged energy supply disruptions and a sharp reversal in global interest rate expectations.
A 48-hour ultimatum issued by U.S. President Donald Trump over the weekend — demanding Iran fully reopen the Strait of Hormuz or face strikes on its power infrastructure — sent shockwaves through trading floors from Tokyo to London, wiping out months of gains and forcing a dramatic repricing of risk assets worldwide .
Sri Lanka Reintroduces QR Code Fuel Rationing System Amid Middle East Supply Disruption.
MSCI’s broadest index of global stocks fell 0.6 per cent on Monday, adding to losses of more than 7.4 per cent for the month, as investors braced for what analysts described as a potential “Apocalypse Now” scenario .
Asia Bears Brunt of Sell-Off as Oil Anxiety Grips Region
Asian equity markets suffered their steepest declines in over a year as the region’s heavy dependence on imported energy left it acutely exposed to the crisis in the Gulf. Japan’s Nikkei 225 index plunged 3.5 per cent to multi-month lows, while South Korea’s Kospi tumbled nearly 6.5 per cent in its worst session since the early stages of the pandemic .
Chinese blue-chip stocks fell sharply, heading for their heaviest beating since U.S. tariffs hit markets last year, as investors worried about the ripple effects of surging commodity prices on the world’s second-largest economy. Hong Kong’s Hang Seng Index sank 3.5 per cent, and Singapore’s Straits Times Index closed down 2.2 per cent .
“The weakness reflects a significant deterioration in global risk sentiment, as geopolitical tensions in the Middle East continue to escalate,” said Hariprasad K, research analyst at Livelong Wealth. “The escalation in rhetoric between the United States and Iran, particularly around the strategic Strait of Hormuz, has heightened fears of potential supply disruptions in global energy markets” .
European Shares Slide, Wall Street Futures Signal More Pain
European markets opened sharply lower, with the pan-European STOXX 600 index falling to a four-month low. The index was last down 1.6 per cent at 564.13 points, with all sectors in the red and industrial stocks bearing the brunt of the sell-off .
“Far from providing reassurance that the conflict could be resolved, Trump’s ultimatum to Iran over the Strait of Hormuz has sent another jolt of worry through markets,” said Susannah Streeter, chief investment strategist at Wealth Club, a British brokerage .
U.S. futures pointed to a deeply negative open on Wall Street, with S&P 500 futures down 0.8 per cent and Nasdaq 100 futures falling 0.9 per cent as of early morning trading . The cash market already ended Friday at its lowest in six months, with the S&P 500 closing at 6,506.48 points — a decline of 1.51 per cent on the session .
Prediction markets reflected the bearish mood, with Polymarket odds showing just a 30 per cent chance of a positive open for the S&P 500 on Monday .
Oil Prices Volatile but Hold Near $113
Oil prices remained the epicentre of the turmoil. Brent crude futures, the global benchmark, were last up 0.8 per cent at $113.20 a barrel, more than 55 per cent higher for the month, as traders priced in the growing risk of prolonged supply disruptions .
Prices swung sharply in Asian trade before stabilising as investors weighed Trump’s ultimatum against signs that Washington may be easing sanctions on Iranian oil sales. Analysts noted that the U.S. has allowed Iranian and Russian oil to be sold from tankers in recent days, tempering some of the immediate supply panic .
Sri Lanka Raises Fuel Prices Seven-Ton Meteor Streaks Across Cleveland Sky, Startling Residents Across Multiple States.
But the longer-term outlook remained grim. The International Energy Agency’s executive director, Fatih Birol, warned on Monday that the crisis was “very severe” and worse than the two oil shocks of the 1970s put together .
“It clearly means more escalation, which means higher oil prices. Some are incorrectly thinking, however, that Iran may cave,” said Amrita Sen, founder of Energy Aspects. “Trump is trying to show he can out-escalate and that way ends in scorched earth for Gulf infrastructure” .
Analysts estimated that the conflict has already knocked out between 7 million and 10 million barrels per day of oil production in the Middle East, with Iraq declaring force majeure on all oilfields developed by foreign companies .
Inflation Fears Flip Rate Expectations
The surge in energy prices has fundamentally altered the outlook for global monetary policy. Just weeks ago, markets were pricing in a series of interest rate cuts by the Federal Reserve and other major central banks. Now, with inflation fears intensifying, investors are betting that rates may have to rise.
Futures markets have wiped out expectations for 50 basis points of easing from the Federal Reserve this year, with rate futures now showing the central bank is more likely to raise interest rates than cut them by the end of 2026, according to CME’s FedWatch tool .
“With the Iranian conflict into its fourth week, and oil prices hanging around the $100 level, expectations have pivoted from rate cuts to potential rate hikes, which have tarnished gold’s appeal from a yield point of view,” said Tim Waterer, chief market analyst at KCM Trade .
The hawkish sea change hammered bond markets, sending yields climbing and adding to borrowing costs for governments already struggling with deficits and debt. Ten-year U.S. Treasury yields hit a nine-month high of 4.4274 per cent, having climbed 44 basis points since the war began .
Gold Loses Safe-Haven Status in Unusual Sell-Off
In one of the most striking developments of the crisis, gold — traditionally the ultimate safe-haven asset — has been in free fall. Spot gold fell more than 8 per cent on Monday to near $4,100 an ounce, its lowest level since December 2026, wiping out all its gains for the year .
The metal has now dropped more than 20 per cent from its record peak of $5,594.82 per ounce reached on January 29, and last week’s 10 per cent decline was its steepest weekly loss since February 1983 .
Analysts said gold’s high liquidity was working against it during the risk-off period, with investors selling the metal to cover margin calls on other assets. The prospect of higher interest rates, which make non-yielding gold less attractive, has also weighed heavily on prices .
“A reinforced shift from safe-haven allocation towards macro-driven positioning could skew risks further to the downside, as a firmer U.S. dollar and the receding probability of the Fed easing dominate the narrative,” BMI, a unit of Fitch Solutions, said in a note .
Currency Markets and Emerging Markets Under Pressure
The U.S. dollar strengthened against most major currencies as the crisis boosted demand for the world’s primary reserve currency. The dollar index was poised for a rebound as retaliatory threats escalated in the Middle East . The euro eased to $1.1514, while the dollar was 0.1 per cent firmer against the yen at 159.45, just off a 20-month high .
Emerging market currencies came under particular pressure, with the Philippines peso leading losses, followed by the South Korean won, Malaysian ringgit, and Taiwan dollar . India’s rupee hit a record low of 93.98 against the U.S. dollar on Monday, reflecting both the global risk-off mood and the country’s vulnerability to higher oil prices .
India’s Markets Bleed as Foreign Investors Pull Billions
Indian equity markets were not spared from the global sell-off. The BSE Sensex tumbled 1,837 points, or 2.57 per cent, to close at 72,696, while the Nifty 50 plunged 602 points, or 2.71 per cent, to 22,513. The sharp sell-off wiped out more than ₹14 lakh crore from the total market capitalisation of all BSE-listed companies .
Foreign Institutional Investors have been relentless sellers, offloading equities worth ₹5,518 crore on Friday alone and pulling out a total of ₹88,180 crore (about $9.6 billion) from Indian equities so far in March . Domestic Institutional Investors bought ₹5,706 crore on Friday, but their buying was insufficient to stem the tide .
All sectors were in the red, with auto and metal indices cracking up to 5 per cent. The Nifty Bank index tumbled more than 3 per cent, dropping below the 52,000 mark for the first time since April 2025 .
What’s at Stake: The Strait of Hormuz Ultimatum
The immediate focus for markets is the expiration of Trump’s 48-hour ultimatum at 7:44 p.m. ET on Monday. The president has threatened to “obliterate” Iranian power plants if Tehran does not fully reopen the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world’s oil and liquefied natural gas normally flows .
Iran has responded defiantly. Parliament Speaker Mohammad Baqer Qalibaf warned on X that critical infrastructure and energy facilities across the Middle East could be “irreversibly destroyed” if Iranian power plants are attacked . The Revolutionary Guards have said they would target Israeli power plants and facilities supplying U.S. bases in the Gulf in retaliation .
The strait has been effectively closed to most shipping since the conflict began on February 28. Trump’s deadline has only heightened the sense of imminent escalation.
Outlook: Caution but Not Panic
For now, market strategists are urging caution but not panic.
“Markets are definitely getting more nervous about what’s happening in the Middle East right now,” Martin Schulz, head of the international equity group at Federated Hermes, told Bloomberg TV. “Our view is it is time for caution, not panic. Duration is the main issue. The longer this drags out, obviously the worse it gets” .
Shane Oliver, head of investment strategy at fund manager AMP, warned that the war could continue for many weeks yet. “Oil prices could rise to say $150 a barrel, and the steady destruction of energy infrastructure means it will take longer to get supply back to normal,” he said .
For investors, the convergence of geopolitical escalation, inflation fears, and a dramatic reversal in rate expectations has created one of the most challenging trading environments in recent memory. As the Hormuz deadline approaches, all eyes remain on the Middle East.
SOURCES / INPUTS
ZAWYA: Global shares slide, yields climb as Gulf war intensifies
The Hindu: Stock markets dive as West Asia conflict continues to dent sentiment
MarketScreener: Gold dives to 4-month low as inflation pressures lift rate hike bets
Global Business Systems: Corporations, Trade, Finance & Market Structures Explained.
Sri Lanka Reintroduces QR Code Fuel Rationing System Amid Middle East Supply Disruption, Global markets steady after oil price plunge as Middle East conflict fuels volatility.
