By Mahmut Cil and Emir Yildirim
ISTANBUL (AA) - Global markets began the week on mixed footing as mutual missile strikes between Israel and Iran, which began June 13, have created uncertainty over how long these attacks will last giving rise to geopolitical tensions and global risk perception.
The latest escalation between Israel and Iran follows Israeli strikes Friday on Iranian nuclear and missile facilities that killed military commanders and scientists, prompting Iran to retaliate with ballistic missiles that caused Israeli casualties and property damage.
Going into the fourth day of attacks, Iran launched missiles into Israel, bypassing air defense systems and striking Tel Aviv and surrounding areas, according to local reports.
Analysts said investor risk appetite had improved following a tariff agreement between the US and China, but escalating Middle East tensions quickly reversed that trend.
The ongoing conflict between Israel and Iran may pose risks to the manufacturing sector due to uncertainties around energy supply stemming from the attacks, analysts warned.
The G7 summit will be held in Canada this week, during which world leaders are expected to discuss trade relations. Markets are also watching Washington’s tariff negotiations with its major trading partners.
In a statement on his social media platform Truth Social, US President Donald Trump said it was now time to reach an agreement to end the escalating conflict between Israel and Iran.
Optimism over tariff negotiations and easing concerns over inflation and recession in the US could be offset by renewed tensions in the Middle East.
- Oil, gold, and bonds climb
Brent crude oil rose for a fourth consecutive day Monday, up by 0.4% to $73.90 per barrel, amid supply disruption concerns related to the Strait of Hormuz, a key transit point for about one-fifth of global oil shipments.
Gold jumped 1.4% Friday as tensions rose, closing at $3,433 per ounce. It edged down slightly Monday to $3,430.
Bond markets surged Friday following Iran’s missile strikes, with the US 10-year Treasury yield rising to 4.41% and hovering around 4.42% Monday.
The US dollar index started the week up 0.5% to 98.2 on Monday.
- Defense, energy stocks rise, airlines drop
The Israel-Iran exchanges boosted defense sector stocks, with Lockheed Martin shares up 3.7% and RTX Corp. gaining 3.3%. Energy firms also saw increases: ExxonMobil rose 2.2%, and ConocoPhillips climbed 2.4%.
Conversely, airline shares declined due to rising fuel prices. American Airlines dropped 5%, United Airlines 4.5%, and Delta Air Lines nearly 4%.
On Friday, the Nasdaq fell 1.3%, the Dow Jones Industrial Average dropped 1.79%, and the S&P 500 declined 1.13%. US indexes began Monday on a positive note.
- Europe slides on energy concerns
European markets saw widespread declines Friday and started the new week in negative territory, amid concerns over rising energy resulting in increased production costs.
Analysts warned that any Iranian move to restrict passage through the Strait of Hormuz would severely impact inflation-struggling economies worldwide.
On Friday, the FTSE 100 slipped 0.39%, France’s CAC 40 fell 1.04%, Germany’s DAX 40 dropped 1.07%, and Italy’s FTSE MIB 30 lost 1.28%.
- Asia gains on trade optimism
In contrast, Asian markets gained as investors reacted positively to recent US-China tariff agreements. Markets also anticipate trade deals between the US, Japan, and South Korea.
South Korea’s Kospi Index continued its upward momentum as political uncertainty eased. Liberal Democratic Party leader Lee Jae-myung was elected president on June 3, two months after former President Yoon Suk Yeol was impeached for attempting to declare martial law and allegedly inciting insurrection.
China’s retail sales rose 6.4% year-over-year in May, beating expectations, while industrial production climbed 5.8%, down from April’s 6.1% growth.
China’s new housing prices continued to decline in May, down 0.22%, while second-hand house prices fell 0.5%.
The Nikkei 225 climbed 1.2%, the Kospi Index 1.3%, and the Shanghai Composite Index 0.2% on Friday’s close, while Hong Kong Special Administrative Region’s Hang Seng Index remained flat.