Global Stocks Hit Four-Month Low as Investors Brace for Prolonged Middle East Conflict

Global investors accelerated a flight to cash and energy shares on Monday as hopes for a swift end to the Middle East war faded, sending Japan's Nikkei down 3.5% and pushing MSCI's gauge of world stocks to a four-month low after it broke support at its 200-day moving average on Friday. The S&P 500 had already fallen 1.5% on Friday, with big technology companies leading losses, and futures dropped a further 0.6% in Asia on Monday. China's blue-chip CSI 300 index headed for its heaviest losses since U.S. tariffs hit markets the previous year. The selling reflected a market-wide shift away from earlier attempts to treat the conflict as a temporary disruption, toward pricing in lasting structural damage to energy markets and global trade.

Trump's Hormuz deadline looms over markets Monday evening Traders were counting down to a deadline set by U.S. President Donald Trump, expiring Monday at around 7:45 p.m. EDT, for Iran to fully reopen the Strait of Hormuz. Trump announced the ultimatum late Saturday via social media, giving Tehran 48 hours to comply or face U.S. strikes on Iranian power plants. Iranian attacks have effectively closed the strait, through which a significant share of global oil supply normally flows. The prospect of further military escalation — rather than a diplomatic reversal — was driving investors to seek shelter in defensive assets, even as some held out for a last-minute Trump policy shift. Selling in bond markets was described as even more furious than in equities, according to Reuters.

Energy infrastructure damage convinces investors the shock is permanent The damage already inflicted on regional energy infrastructure was reinforcing the view that neither a policy pivot nor interest rate cuts could undo the economic consequences of the war. The head of QatarEnergy told Reuters last week that nearly a fifth of Qatar's LNG export capacity had been knocked out by Iranian attacks, and that long-term supply contracts would be disrupted for years. Airline ticket prices have risen and petrol prices are up. United Airlines said it was preparing for oil at $100 per barrel through the end of 2027 and planned capacity cuts of five percentage points. Investors were shifting portfolios toward cash and energy shares while cutting exposure to bonds, technology, and mining. 5 (percentage points) — United Airlines planned capacity cuts through end of 2027

„Right now, companies and countries have reserves and stockpiles, but those will eventually be depleted unless this wraps up. So markets are starting to price that and they need to price that.” — Aaron Costello via Reuters

S&P 500 (Friday): -1.5, Nikkei (Monday): -3.5, S&P 500 futures (Asia Monday): -0.6

Investors exit quickly as conviction around valuations collapses Market participants described a rapid and broad-based de-risking across regions and asset classes. Karen Jorritsma, head of Australian equities at RBC Capital Markets in Sydney, said cash balances were rising and de-grossing was visible across markets in Asia, Australia, and the United States. Aaron Costello, head of Asia at investment advisory Cambridge Associates, speaking at a Milken Institute event in Hong Kong, said investors had been conditioned by years of Trump reversals to expect short-term recoveries, but that Friday's move to new lows marked a change in sentiment.

„Markets have been, until recently, extremely resilient. Then on Friday, markets kind of broke to new lows... because I think the reality is it is going to escalate before it de-escalates.” — Aaron Costello via Reuters

„There was a huge lack of conviction around valuation on this market rally. And so what we're seeing now is a fairly quick exit to the door.” — Karen Jorritsma via Reuters

The U.S.-Israel military campaign against Iran, designated Operation Epic Fury, began on February 28, 2026. The opening strikes killed Ali Khamenei, Iran's longtime Supreme Leader. His son, Mojtaba Khamenei, was appointed Supreme Leader on March 9, 2026. The conflict has disrupted shipping through the Strait of Hormuz, one of the world's most critical oil transit chokepoints, and triggered a broad reassessment of energy market stability among institutional investors globally.