June 13, 2025 Global financial markets were rattled early Friday after Israel launched coordinated military strikes on Iran, targeting nuclear sites and weapons facilities. The escalation added fresh uncertainty to already volatile markets, sparking a surge in oil prices and a broad sell-off in equities as investors fled to traditional safe-haven assets.
Oil Prices Surge on Supply Fears
Crude oil prices spiked dramatically in response to the news, with Brent crude rising nearly 14% during Asian trading hours, before easing to around a 9% gain at $75.54 per barrel — its sharpest one-day rise since the energy shock following Russia’s invasion of Ukraine in 2022. U.S. West Texas Intermediate (WTI) futures also climbed nearly $6 to $73.91.
Gold, Dollar, and Swiss Franc Attract Safe-Haven Demand
As tensions escalated, investors moved swiftly to reduce exposure to risk. Gold prices climbed over 1% to reach $3,416 per ounce, as investors turned to safe-haven assets amid the Israel–Iran escalation (Reuters)
Approaching the all-time high of $3,500. The U.S. dollar and Swiss franc also gained, reflecting the broader flight to safety. The dollar index recovered significantly, climbing 0.8% to 98.50 (Reuters).
Equity Markets Retreat Globally
Stock markets tumbled worldwide. U.S. futures dropped over 1.5%, and European shares saw losses approaching 1%, while key Asian markets — including Japan, South Korea, and Hong Kong — posted similar declines.The Israeli shekel also depreciated, falling roughly 1.7% against major currencies.
Investor Sentiment Hit by Geopolitical Risk
“The central concern now is how far this will go,” said one London-based analyst, emphasizing the unpredictable nature of escalating regional conflict. “Markets are reacting as expected: equities down, oil and safe assets up.”
This military operation marks a significant escalation, with Israel reportedly targeting critical Iranian infrastructure and military leadership in what could become a sustained campaign. While U.S. officials have stated they were not involved, the development adds yet another layer of geopolitical risk to a financial landscape already shaped by inflation concerns and shifting U.S. economic policy.
Bond Yields Reflect Conflicting Market Forces
Government bonds saw mixed movements. U.S. 10-year Treasury yields, which initially fell amid the rush to safety, later rose to 4.38%, reflecting concerns that surging oil prices could reignite inflationary pressures. European bond yields mirrored this pattern, with Germany’s 10-year yield dipping before recovering to around 2.42%.
Analysts note the dual forces at play: rising geopolitical risk typically lowers bond yields, but the inflationary effect of higher energy costs may force central banks to maintain or tighten interest rates.
Currencies in Focus: Dollar Up, Yen Slides
While the U.S. dollar and Swiss franc gained strength, the Japanese yen weakened by 0.6%, reversing earlier gains. The euro also declined by 0.8%, pulling back from its recent highs.
Conclusion
The latest flare-up between Israel and Iran has thrust global markets into another period of heightened volatility. As investors reassess risk and seek refuge in gold and the dollar, analysts warn that continued instability in the Middle East could have lasting effects on commodity prices, inflation expectations, and central bank policy decisions.
