Global Markets Resilient Amid Tensions in the Middle East – How Investors View US Involvement

Despite the US entering a military conflict in the Middle East and airstrikes on Iranian nuclear facilities, international markets appear restrained. Typically, such geopolitical flare-ups would trigger waves of liquidation and mass shifts to safe havens. However, investors in global markets seem to assess the crisis as controlled, with limited systemic consequences. The global index MSCI World recorded a marginal dip of 0.12% during trading on Monday (June 23, 2025), while returns on secure investment options were mixed: the Japanese yen fell 0.64% against the dollar, gold moved slightly downward by 0.23%, and the dollar index strengthened by 0.35%. This reaction contrasts sharply with the initial market shock following Israel’s first strike against Iran days earlier. According to CNBC, Dan Ives of Wedbush Securities estimates that markets view the targeted US attack as ‘redemption’ from the threat of Iran’s nuclear program, reducing the risk of uncontrollable escalation. ‘We believe the risk of war spreading to the broader region is limited, and this is already factored into risk assets,’ he emphasized. The next critical question is how Tehran will respond. Iran’s Foreign Minister warned that the country ‘keeps all options open,’ while state media reported that parliament approved the closure of the Strait of Hormuz—a maritime artery through which about 20 million barrels of oil pass daily. Many analysts consider this possibility the worst-case scenario for markets: if it happens, oil prices could exceed $100 per barrel, shares would face pressures above 10%, and capital would flood toward safe havens. However, most experts downplay the likelihood of this threat being realized. Peter Boockvar of Bleakley Financial noted that ‘if Iran accepts the end of its military nuclear program, then the episode may conclude here, allowing markets to continue smoothly.’ Strategic analyst Mark Pappas from GeoMacro Strategy was even more definitive: ‘Iran knows that closing Hormuz would provoke an overwhelming response from both the US and Gulf states, whose interests would be directly affected.’ It’s not the first time Tehran has threatened to close Hormuz. Similar statements were made in 2011–2012 and again in 2018 when the US withdrew from the nuclear agreement. However, these threats never materialized, a factor now embedded by markets as their base scenario. Ed Yardeni, founder of Yardeni Research, remains bullish on American markets. He believes Trump bolstered US deterrent power and reaffirmed the doctrine of ‘peace through strength,’ forecasting the S&P 500 to reach 6,500 units by the end of 2025. While acknowledging the unpredictability of geopolitical developments in the Middle East, he argues that the destruction of Iran’s nuclear infrastructure opens the way for a ‘radical transformation’ of the region. Thus, investors currently seem to perceive military involvement as a limited-duration event with relatively defined boundaries. Given that markets tend to value long-term prospects over immediate headlines, the geopolitical crisis hasn’t yet translated into panic. However, as many point out, this stance can change rapidly. Tehran remains a variable with historically unpredictable behavior. If international community responses remain uncoordinated, Wall Street’s calm may be tested. For now, it remains more resilient than many expected.