Global capital markets are showing signs of stabilization following a wave of panic selling triggered by the outbreak of armed conflict in Iran. The Nikkei index rose by over 2,300 points, and stock exchanges in Europe and the US are recovering losses thanks to a slowdown in oil price increases. Investors are reacting with hope to signals of possible de-escalation, although assets in safe-haven money market funds have reached a record level of $8.27 trillion.

Record Flight to Cash

Money market fund assets rose to an unprecedented level of $8.27 trillion, indicating the scale of global investor panic.

Powerful Rebound in Japan

The Nikkei index rose by over 2,300 points in a single session following reports of possible de-escalation of the conflict in Iran.

Collapse in the Korean Market

The Seoul stock exchange recorded its worst day in history, leading to a collapse of the won's exchange rate and panic among retail investors.

Oil Price Stabilization

The halt in the rapid rise of oil prices allowed stock markets in Europe and the US to recover some of the losses incurred in previous days.

The situation in global financial markets following the outbreak of full-scale conflict in Iran will likely enter a correction phase after the initial shock. The first investor reactions were characterized by a panicked flight to cash, which drove assets accumulated in money market funds to a historic level of $8.27 trillion. The hardest hit was South Korea, where the stock market crash led to massive liquidation of leveraged positions and a sharp weakening of the won. Emerging markets in Africa and India felt similar pressure, where the rupee fell to a record low against the US dollar. However, on Thursday morning, sentiment improved dramatically, best illustrated by the rally of Japan's Nikkei 225 index, gaining over 2,300 points. The impetus for the rebound came from reports of diplomatic efforts aimed at de-escalating tensions on the Washington-Tehran line. As a result, crude oil prices stopped rising, allowing energy commodity importers to breathe a sigh of relief. European trading floors, including the stock exchanges in Milan and London, managed to recover nearly 2% of losses from previous sessions. Nevertheless, optimism remains fragile, as US futures markets lost some of their gains after signals of possible tariff policy tightening by the US administration. The Strait of Hormuz, located off the coast of Iran, is a strategic global trade chokepoint through which about 20% of global oil supplies flow, making any conflict in this region a direct threat to global energy prices. In the alternative assets market, we are observing interesting dynamics. Bitcoin, after an initial drop, began to regain value, similar to traditional gold, which is again gaining on a wave of demand for so-called safe havens. Analysts note that despite the current rebound, the long-term effects of the war could lead to a lasting liquidity shock in the US dollar. The situation remains extremely dynamic, and further index movements will depend on specific military actions and the effectiveness of international diplomacy in preventing the war from spreading across the entire Middle East. „DoubleLine Sees Emerging-Market Virtuous Loop Despite Iran War” — DoubleLine Capital

Mentioned People

  • Scott Bessent — A key figure nominated for the US administration, whose statements on tariffs influenced futures market volatility.