Global stocks slide as U.S.-Iran conflict drives oil near $97

Stock markets across Asia and Europe fell on Monday as the escalating military confrontation between the United States and Iran pushed crude oil prices higher, compounding fears over inflation and tighter monetary policy worldwide.

India's Sensex dropped 382.62 points, or 0.50%, to settle at 76,132.81, while the Nifty 50 declined 118.55 points to 23,779.15, dragged by losses in IT, metal, and oil and gas shares. Infosys ↗ 0.81% led the decline, falling 3.81%. In Europe, the STOXX 600 edged down 0.1% as investors braced for a widely expected interest rate hike from the European Central Bank at its September 10 meeting. Bitcoin ↘ 2.60% also slid below $80,000, weighed down by uncertainty over Federal Reserve policy.bloomingbit+5

Oil Supply Fears Intensify

The selloff followed U.S. Central Command's announcement on September 5 that it struck three Iranian oil tankers near Kharg Island, Jask, and the Gulf of Oman after Iran's Islamic Revolutionary Guard Corps fired ballistic missiles at two U.S. Navy warships. Admiral Brad Cooper said the strikes were intended to impose greater economic costs on Iran. Brent crude traded near $97 a barrel on Monday, extending a sharp rally that has seen prices climb more than 6% this month, while West Texas Intermediate hovered above $92.bfsi.economictimes.indiatimes+5

Higher energy costs threaten to reignite inflation pressures just as central banks weigh their next moves. A Reuters poll published last week found economists expect the ECB to raise its deposit rate by a quarter point to 2.50% on September 10. In the United States, a stronger-than-expected August jobs report revived concerns that the Federal Reserve could raise rates again, even as President Donald Trump publicly called on the Fed to cut.money.rediff+2

Risk-Off Mood Spreads

The combination of geopolitical risk and monetary policy uncertainty triggered broad risk-off positioning. Foreign institutional investors offloaded Indian equities worth Rs 3,111.94 crore on Friday, and India's VIX advanced 5.62%. A $320 million security incident on Bitcoin's Liquid Network added to caution in crypto markets.bloomingbit+1

"Crude oil remains the dominant macro driver," said Ponmudi R, CEO of Enrich Money. "The latest escalation in US-Iran hostilities around the Strait of Hormuz keeps concerns over potential supply disruptions firmly in focus."money.rediff

The next major catalyst is Friday's U.S. inflation data, which analysts say will shape Federal Reserve rate expectations and global risk sentiment heading into a pivotal stretch for markets.money.rediff