Markets Sell Off as Middle East Tensions and Iran Fears Spike
Stocks fell sharply Thursday as geopolitical risks surged, oil jumped 6%, and the Fed faces its most unpredictable meeting in years.
Global markets took a hard hit Thursday as escalating Middle East tensions rattled investor confidence, sending U.S. stocks sharply lower and driving crude oil futures up 6.17% to settle at $92.19 — one of the more dramatic single-session moves in recent memory. The risk-off wave swept across asset classes, with the dollar climbing alongside bond yields as traders fled to relative safety.
President Trump signaled he was considering what he described as a massive military strike, while the U.S. Senate blocked a resolution that would have curtailed Trump's war powers against Iran. Those twin developments kept geopolitical anxiety at the forefront of market psychology, with Middle East hostilities showing no sign of de-escalating.
Read more ECB Rate Decision and US Jobless Claims Headline Thursday →
On the trade front, Canada's Prime Minister Mark Carney struck a defiant tone, vowing not to hesitate in defending Canadian interests against U.S. trade pressure while simultaneously stating Canada remains focused on securing a comprehensive USMCA deal. Separately, the EU's fine against Google added another layer of friction to already strained U.S.-EU trade relations.
Economic data delivered a mixed picture. U.S. initial jobless claims came in at a surprisingly tight 187,000 — well below the 212,000 expected — suggesting the labor market remains resilient even as financial conditions tighten. Meanwhile, 30-year mortgage rates hit their highest level since August 2025, deepening pressure on American homebuyers. The European Central Bank held its deposit rate steady at 2.25% as widely anticipated, with ECB President Christine Lagarde noting modest improvement in eurozone economic activity.
Looking ahead, the Federal Reserve's next meeting is shaping up to be, in the words of Wall Street Journal reporter Nick Timiraos, one of the most unpredictable in recent history — a characterization that, given Thursday's confluence of geopolitical shocks and stubborn inflation signals, few traders would dispute. Continue reading at Forexlive.
