Israel-Iran Conflict: Markets Show Surprising Resilience Amid Geopolitical Tensions
new York, June 23, 2025 – Global financial markets are exhibiting unexpected stability despite escalating geopolitical tensions stemming from the Israel-Iran conflict and the United States’ involvement. Contrary to initial expectations of a market downturn, investors have largely shrugged off the escalation, with many market strategists expressing confidence that the conflict will remain contained.
The Msci World Index, a key indicator tracking over a thousand large and mid-cap companies across 23 developed markets, experienced a minimal decline of just 0.12% as of 1 P.M.Singapore time. this surprising market reaction suggests a level of investor confidence that defies the typical response to such geopolitical flashpoints.
Market Reaction: Calm Amidst Conflict
Safe-haven assets are showing a mixed performance, indicating a lack of widespread panic. The Japanese yen weakened by 0.64% against the dollar, while spot gold prices dipped slightly by 0.23% to $3,360 per ounce. Concurrently, the dollar index, which measures the U.S.dollar against a basket of currencies, saw a rise of 0.35%.
Market reactions following the U.S. strikes on Iranian nuclear facilities have been notably less aggressive than those observed after Israel’s initial airstrikes against Iran just over a week prior.Some analysts interpret this as a sign that the market views the situation as being brought under control.
Did You Know? The Strait of Hormuz is a vital waterway for global oil trade, with approximately 20 million barrels of oil and oil products passing through it daily.
Expert Analysis: Conflict Containment
Dan Ives, Managing Director at Wedbush, stated, “The markets view the attack on Iran as a relief, with the nuclear threat now gone for the region.” He also anticipates minimal risks of the Iran-Israel conflict spreading to othre areas, suggesting a more “isolated” scenario.
Other industry experts concur that while the gravity of recent events should not be dismissed, they do not currently pose a systemic risk to global markets.
Iran’s response: Strait Of Hormuz Threat
Iran’s Foreign Minister has asserted the country’s right to “all options” in defending its sovereignty. Iranian state media has reported that the country’s parliament approved the closure of the Strait Of Hormuz. This crucial waterway is essential for global oil trade, facilitating the transit of approximately 20 million barrels of oil and oil products each day.
Peter Boockvar, Chief Investment Officer at Bleakley Financial Group, commented, “It all depends on how Iran responds. If they accept the end of their military nuclear desires…then this could be the end of the conflict,and markets will be fine.” Boockvar does not believe Iran will disrupt global oil supplies.
Pro Tip: Keep a close eye on geopolitical news and expert analysis for potential market shifts.Diversifying your portfolio can mitigate risks associated with unexpected events.
Worst-Case Scenario: Strait Closure and Market Panic
Marko Papic, Chief Strategist at GeoMacro Strategy, believes the worst-case scenario for markets would be the closure of the Strait of Hormuz. However, he considers this outcome unlikely.
If Iran were to close the Strait, Papic warns, “oil prices go north of $100, fear and panic take over, stocks go down ~10% minimum, and investors rush to safe havens.” He adds that markets are currently subdued due to Tehran’s “limited tools” for retaliation.
The idea of shutting down the Hormuz waterway is a recurring theme in Iranian rhetoric. However, it has never been implemented, with experts emphasizing its improbability.
In 2018, Iran threatened to block the Strait Of Hormuz after the U.S. withdrew from the nuclear deal and reinstated sanctions. Similar threats were made in 2011 and 2012,when senior Iranian officials warned of closure if Western nations imposed further sanctions on iran’s oil exports due to its nuclear activities.
Papic concludes, “Tehran understands that, if they were to close the Strait, the retaliation from the U.S. would be swift, punitive, and brutal.”
U.S. bull Market Confidence Remains
Ed Yardeni, founder of Yardeni Research, affirms that the recent events in the Middle East have not shaken his confidence in the U.S. bull market.
He states, “Geopolitically, we think that President Trump has just reestablished America’s military deterrence capabilities, thus increasing the credibility of his ‘peace through strength’ mantra.” Yardeni maintains his target of 6,500 for the S&P 500 by the end of 2025.
While acknowledging the difficulty of predicting geopolitical developments in the Middle East, Yardeni believes that the region is poised for a “radical change” now that Iranian nuclear facilities have been destroyed.
Comparing Market Reactions
| Event | market Reaction | Expert Outlook |
|---|---|---|
| Initial Israeli airstrikes | More Aggressive | Potential Systemic Risk |
| U.S. Strikes on Iran | less Aggressive | Contained Conflict |
| Strait of hormuz Closure (Hypothetical) | Panic, Oil Price Surge | Unlikely, Severe Retaliation |
The Enduring Impact of Geopolitical Events on Markets
Geopolitical events invariably introduce volatility into financial markets. The Israel-Iran conflict serves as a stark reminder of how quickly international tensions can impact investor sentiment and market stability. However, history shows that markets often adapt and recover, provided that conflicts remain contained and do not escalate into wider regional or global crises.
Investors should remain vigilant, diversifying their portfolios and seeking expert advice to navigate these uncertain times. The key is to maintain a long-term viewpoint and avoid knee-jerk reactions to short-term market fluctuations.Staying informed about geopolitical developments and understanding their potential economic consequences is crucial for making sound investment decisions.
Frequently Asked Questions
- How Have Financial Markets Reacted To The Israel-Iran Conflict?
- what Is The Potential impact Of The U.S. Involvement In The Israel Iran Conflict?
- Could Iran Close The Strait Of Hormuz, And What Would Be The Consequences?
- Why Are Markets Not Panicking About The Israel-Iran Conflict?
- What Are The Possible Countermeasures From Iran Following U.S. Strikes?
Surprisingly, Financial Markets Have Shown Resilience, With Limited Declines In Major Indices. Some Analysts Even See potential Upside For Certain Risk Assets.
While Seemingly A Major Geopolitical Event, Many Strategists Believe The Conflict’s Impact Will Be Contained. The Markets Reacted Less Aggressively To U.S. Strikes Compared To Initial Israeli Airstrikes.
Even though Iran Has threatened to Close The Strait Of hormuz Previously, Experts Consider It Unlikely Due To Potential Severe Retaliation From The U.S. If It Were To Happen, Oil prices Could Surge And Global Markets Could Panic.
Some Analysts Believe The Destruction Of Iranian Nuclear Facilities Has Reduced The Nuclear Threat In The Region, Leading To A Sense Of Relief. Others Point To Iran’s Limited Options For Retaliation.
Iran’s Foreign Minister Has Stated That The Country Reserves All options To Defend Its sovereignty. One Potential Countermeasure, Though Considered Improbable, Is Closing The Strait Of Hormuz.
How Do You See The Israel-Iran Conflict Impacting Global Markets? Share Your Thoughts And Predictions Below.
