Geopolitical Tensions Spike as US-Iran Standoff Drives Oil Surge and Equity Slide

Global markets shifted toward a risk-off posture on Monday as geopolitical instability in the Middle East intensified. A renewed standoff surrounding the Strait of Hormuz has triggered a sharp rally in energy prices and a retreat in equity markets, erasing some of the optimism from the previous session. The escalation comes immediately after the S&P 500 reached a fresh record high on Friday, highlighting a rapid shift in investor psychology. The Strait of Hormuz remains a critical chokepoint for global oil shipments, making any instability in the region a primary concern for global energy security and inflation expectations. Price action was stark across asset classes. Brent crude surged by more than 7%, while S&P 500 futures dropped nearly 1%. The US dollar strengthened against a basket of major peers, with risk-sensitive currencies, specifically the Australian and South African currencies, leading the losses. The flight to safety is evident in the dollar's ascent and the decline of risk-sensitive assets. Traders are now pricing in potential supply disruptions, which could sustain upward pressure on energy costs and weigh on global equity valuations if the standoff persists.