Global markets decline as Israel-Iran conflict escalates and Fed holds rates​

​​​Middle East conflict drives flight to safety

​Stock markets across Europe and Asia declined for the third consecutive day as investors grew increasingly concerned about potential US involvement in the Israel-Iran conflict. The STOXX Europe 600 index fell nearly 2.5% for the week, marking its biggest weekly decline since April's tariff-induced turmoil.

​President Trump kept markets on edge by telling reporters he "may or may not" decide whether the US will join Israel's attacks on Iranian nuclear facilities. The Wall Street Journal reported that Trump had approved attack plans but was waiting to see if Iran would abandon its nuclear programme.

​This uncertainty has created significant volatility across global markets. US S&P 500 futures dropped 0.6% as investors positioned defensively ahead of what could be a major escalation in regional conflict.

​Oil prices surge on supply disruption fears

​Commodity trading has been particularly active as oil prices jumped nearly 11% over the past week. Brent crude oil rose 1.15% to $77.58 per barrel, approaching its highest levels since January.

​Iran produces approximately 3.3 million barrels per day and is OPEC's third-largest producer. About 19 million barrels of oil and petroleum products transit through the Strait of Hormuz daily, raising concerns about potential supply disruptions.

​Goldman Sachs justified a $10.00 per barrel geopolitical risk premium, suggesting Brent crude could push above $90.00 if the conflict widens. This presents opportunities for traders looking to capitalise on energy market volatility.

​The surge in oil trading reflects growing market concerns about supply shocks from the Middle East.

​Federal Reserve maintains hawkish stance

​The Federal Reserve (Fed) held interest rates steady at 4.25%-4.50% as expected, but Chair Jerome Powell struck a cautious tone about future cuts. The Fed maintained projections for two quarter-point cuts this year, though Powell warned of "meaningful" inflation ahead due to potential trade tariffs.

​Despite mixed economic signals, the Fed appears to be underestimating economic weakness, particularly in the labour market. This hawkish stance has strengthened the dollar, which rose broadly against major currencies including the euro and commodity-linked currencies.

​Bitcoin consolidates after Fed decision

Bitcoin traded in a narrow range between $103,600.00 and $105,500.00 following the Fed's decision, currently sitting at around $104,996.00. The cryptocurrency has shown resilience despite short-term pressure from macroeconomic and geopolitical factors.

​Bitcoin ETFs recorded eight consecutive days of inflows totalling over $2.2 billion, reflecting continued institutional interest. Ethereum briefly dipped below $2,500.00 before recovering to trade at $2,520.00.

​Most major cryptocurrencies declined, with Hyperliquid down 7.37% and Cardano falling 2.71%. The crypto market appears to be consolidating as investors await clearer directional signals.

​Central bank decisions ahead

​The Swiss National Bank (SNB) cut rates to zero as expected, while the Bank of England (BoE) is expected to hold rates unchanged despite inflation cooling last month. Food prices jumped sharply, and policymakers will consider potential energy price impacts from Middle East tensions.

​Markets remain focused on geopolitical developments and central bank communications. The combination of conflict risk and monetary policy uncertainty suggests continued volatility ahead, creating both challenges and opportunities for active traders.

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