🚨5 Market Shocks in 5 Days: Oil, War, Fed Talks & What’s Next?📉💰

1. Tensions in the Middle East Send Oil Prices Soaring

Markets started the week with caution as conflict between Israel and Iran intensified. Over the weekend, both nations exchanged heavy airstrikes, targeting military bases and energy facilities. As a result, oil prices spiked, with Brent crude jumping up to 5.5% early Monday before settling lower. The fear? That the war could disrupt vital oil routes like the Strait of Hormuz, which carries about 21% of the world’s petroleum supply.

An Iranian lawmaker even hinted that shutting down the Strait was “under serious consideration.” If that happens, some analysts believe oil prices could shoot above $120 a barrel — a major shock to the global economy.

2. Asia Reacts Cautiously Amid Global Jitters

Asian markets responded with hesitation. The region's stocks barely moved, rising just 0.1% overall. Japan’s Nikkei 225 rose 1.25%, lifted by a weaker yen and a rally in defence stocks.

In contrast, Chinese shares were mixed, even as retail sales data surprised on the upside, growing 6.4% in May — faster than expected.

Experts say the muted reaction reflects uncertainty about how long the conflict might last and how much it could affect energy supplies in Asia.

3. U.S. Markets Yo-Yo As Investors “Buy the Dip”

In the U.S., Friday’s market drop was steep.

The S&P 500 fell 1.1%, the Dow Jones slipped 1.2%, and the Nasdaq dropped 0.7%. But by Sunday night, futures were ticking higher as investors tested the waters. Some looked back to past wars, like the Gulf War in 1991, when stocks rebounded sharply after an initial fall. The hope now? That the current selloff may also be short-lived, especially as S&P 500 continues to fall today.

Still, risks remain. Gold prices climbed up to $3,459.90 an ounce — near record highs — as investors looked for safety.

4. Fed and Central Banks in Focus This Week

As geopolitical tensions build, central banks step into the spotlight. The U.S. Federal Reserve will hold its much-anticipated policy meeting on Tuesday and Wednesday. While no rate change is expected, investors will be closely watching Fed Chair Jerome Powell’s comments and economic forecasts.

Other banks — including those in Japan, the UK, and Scandinavia — will also announce decisions. Any surprises could stir markets already on edge.

5. The Dollar, Earnings & Inflation Concerns

The dollar strengthened slightly on Monday, as investors sought stability. But analysts warn that the U.S. currency’s recent strength may fade if the Fed signals slower economic growth.

Meanwhile, corporate earnings continue. Lennar, Accenture, and CarMax are among the major firms reporting this week. Inflation worries are also back on the table as oil rises again. Combined with tariffs and weak consumer confidence, this could complicate central bank decisions going forward.

Bottom Line: With war threats, rising oil prices, inflation worries, and central bank action all happening in just a few days, investors worldwide are navigating one of the most uncertain weeks in recent memory.

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