Global stock markets are experiencing significant volatility following a renewed exchange of airstrikes between the U.S. and Iran over the weekend, which also saw Tehran declare the Strait of Hormuz closed. U.S. stock futures slipped, oil prices surged, and Asian markets, notably South Korea’s Kospi, saw sharp declines, as investors brace for geopolitical instability and upcoming corporate earnings.
Global markets opened Monday with significant unease as geopolitical tensions flared between the U.S. and Iran. Following a weekend of renewed airstrikes and Iran's declaration of a closure of the critical Strait of Hormuz – though disputed by President Donald Trump – investors reacted swiftly, leading to declines in stock futures and a surge in crude oil prices.
U.S. stock futures indicated a challenging start to the trading week. Dow Jones Industrial Average futures fell 229 points (0.43%), while S&P 500 futures lost 0.58%, and Nasdaq-100 futures were down 1.37%. This market downturn comes as traders also anticipate a slew of corporate earnings reports later in the week, adding another layer of uncertainty.
The Middle East conflict, ignited by Iran's attack on a commercial ship transiting the Strait, prompted Trump to order retaliatory airstrikes. Iran, in turn, targeted U.S. facilities in multiple Gulf countries. The escalating hostilities sent crude prices soaring, with Brent futures climbing 3.7% to $78.86 per barrel and West Texas Intermediate futures advancing over 3% to $74.05. Goldman Sachs noted that “recent attacks highlight how uncertain Gulf exports remain and that a serious re-escalation could re-intensify the short run upside risk to oil prices.”
Asian markets bore the brunt of the geopolitical jitters. South Korea's Kospi experienced a dramatic plunge of over 7%, falling below 7,000 to its lowest level since May 4, eventually closing down almost 9% at 8,806.93. The small-cap Kosdaq also saw a significant drop of 4.6%. Japan's Nikkei 225 lost 1.92%, while the Topix declined 0.71%. Australia's S&P/ASX 200 was largely flat, while Mainland China's CSI 300 was down 0.64%. Hong Kong's Hang Seng Index managed to edge 0.91% higher, defying the broader regional trend.
European markets are also poised for a decisively lower start, with Stoxx 50 futures sliding 0.97%, Germany's DAX set to open down 1.12%, France's CAC 40 expected to drop 0.82%, and the U.K.'s FTSE 100 facing a 0.39% decline.
Interestingly, traditional safe-haven assets did not uniformly benefit from the heightened geopolitical concerns. The 10-year U.S. Treasury yield rose 1 basis point to 4.585% as bond prices declined, and spot gold fell 1.22% to $4,070.21 an ounce. Silver also dropped 2.8% to $58.18 per ounce. A chart showing 'Gold prices year-to-date' indicated this decline. Standard Chartered highlighted gold as a preferred hedge against uncertainty, but noted that high U.S. real yields and expectations of steady Fed rates might reduce bullion's appeal.
Chip Stocks and Corporate Moves
South Korean chipmakers faced particular pressure. SK Hynix shares tumbled more than 15% in Seoul, marking their worst day after a strong Nasdaq debut, as investors booked profits and re-evaluated demand for AI memory chips. Samsung Electronics also saw its shares fall more than 6%, despite plans to accelerate the operationalization of its Yongin semiconductor fabrication plant. Other Japanese chip-related stocks like SoftBank Group, Renesas, Tokyo Electron, and Advantest were also trading lower.
Conversely, LG Electronics shares rose over 5% following reports that the company will build AI server racks for Nvidia, strengthening their collaboration in AI capabilities and manufacturing competitiveness.
In other corporate news, shares in Akzo Nobel, owner of Dulux, climbed 3.3% after Nippon Paints offered to acquire its decorative paints business for 7.5 billion euros ($8.6 billion). Akzo Nobel's board, however, continues to recommend a merger of equals with Axalta Coating Systems.
Upcoming Economic Data and Earnings Season
Looking ahead, the market will closely watch the June CPI report due out Tuesday morning. Furthermore, a heavy corporate earnings season is kicking off, with major U.S. banks including JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and Wells Fargo among 28 S&P 500 companies reporting this week. Netflix, Johnson & Johnson, and UnitedHealth are also on deck. Expectations are high, with analysts estimating second-quarter S&P 500 profits to have grown by over 23% year-over-year, according to FactSet.
Raymond James CIO Larry Adam highlighted the tech sector as a key area to watch, particularly whether AI can continue to boost earnings. Despite concerns about hyperscalers moderating AI-related capital spending, Adam anticipates a reaffirmation of capex plans through 2028, citing tangible evidence of business benefits from AI adoption, with mentions of AI across all 11 sectors up 98% year-over-year.
Fundstrat's Mark Newton noted that “near-term US equity trends remain bullish,” expecting a breakout in the S&P 500 soon, although the Nasdaq 100 may take longer. This comes after a mixed previous week, where the Dow fell 0.5%, but the S&P 500 gained 1.2% and the Nasdaq Composite climbed 1.7%, while the Russell 2000 dropped 0.6%.
