Finance
Stocks tumble, dollar up as Middle East war lights safe-haven trade
Published by Global Banking & Finance Review®
Posted on June 19, 2025
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 19, 2025
3 min readLast updated: January 23, 2026
Stocks dropped and the dollar rose as Middle East tensions increased, with investors seeking safe-haven assets. Oil prices surged due to supply concerns.
By Kevin Buckland, Johann M Cherian and Amanda Cooper
TOKYO/LONDON (Reuters) -Global stocks fell and the dollar rose on Thursday, reflecting investors' preference for perceived safe havens as concerns mounted over possible U.S. involvement in the Israel-Iran air war, which has ignited a rally in the oil price this week.
On the geopolitical front, President Donald Trump kept the world guessing about whether the United States would join Israel's bombardment of Iranian nuclear sites, telling reporters outside the White House on Thursday; "I may do it. I may not do it."
A flurry of central bank decisions in Europe highlighted how Trump's erratic approach to trade and tariffs has complicated the job of central bankers in setting monetary policy.
In Europe, stocks fell for a third day, leaving the STOXX 600 down nearly 2.5% on the week, set for its biggest week-on-week decline since the tariff-induced turmoil of April.
U.S. S&P 500 futures fell 0.5%, although most U.S. markets - including Wall Street and the Treasury market - will be closed on Thursday for a public holiday.
"Market participants remain edgy and uncertain," said Kyle Rodda, senior financial markets analyst at capital.com.
Speculation was rife "that the U.S. will intervene, something that would mark a material escalation and could invite direct retaliation against the U.S. by Iran," he added.
"Such a scenario would raise the risk of a greater regional conflict, with implications for global energy supply and probably economic growth."
Much of the recent nervousness in markets has been centred around crude supply shocks from the Middle East, which has driven the price of crude oil up by 11% in a week. Brent crude rose by as much as nearly 1% to $77.40 a barrel, close to its highest since January.
Gold, which tends to struggle when the dollar gains, pared earlier losses to trade at $3,372 an ounce, up 0.1% on the day.
The dollar itself rose broadly, leaving the euro down 0.1% at $1.1466 and the Australian and New Zealand dollars - both risk-linked currencies - down 0.7% and 1%, respectively.
CENTRAL BANK POLICY
Overnight, the Federal Reserve delivered mixed signals to markets. Much to Trump's displeasure, policymakers held rates steady as expected and retained projections for two quarter-point rate cuts this year.
However, Fed Chair Jerome Powell struck a cautious note about further easing ahead, saying at his press conference that he expects "meaningful" inflation ahead as a result of Trump's aggressive trade tariffs.
Strategists at MUFG said the Fed "is underestimating the weakness in the economy that was present before the tariff shock, specifically, almost ignoring the cracks that have been visible in the labor market for years".
The Bank of England left UK rates unchanged, as expected, and policymakers said trade policy uncertainty would continue to hurt the economy, triggering a drop in the pound.
The Norges Bank surprised markets with a quarter-point cut that weighed on the crown currency, while the Swiss National Bank cut interest rates to zero, as expected, but the fact it did not go below zero gave the franc a lift, leaving the dollar down 0.1% at 0.8184 francs.
In commodity markets, the price of platinum hit its highest in almost 11 years, near $1,300 an ounce, driven partly by what analysts said was consumers seeking a cheaper alternative to gold.
(Additional reporting by Kevin Buckland in Tokyo and Johann M Cherian in Bengaluru, Editing by Shri Navaratnam, Bernadette Baum and Ed Osmond)
Global stocks fell and the dollar rose, indicating investors' preference for safe havens amid rising concerns over U.S. involvement in the Middle East.
The Federal Reserve held rates steady, while the Bank of England and Norges Bank made decisions that reflected ongoing trade policy uncertainty and economic concerns.
Concerns over crude supply shocks from the Middle East drove oil prices up by 11% in a week, contributing to market nervousness and affecting investor sentiment.
Gold prices tend to struggle when the dollar gains, but it managed to pare earlier losses, trading slightly higher on the day.
Speculation about U.S. intervention raises the risk of a greater regional conflict, which could have significant implications for global energy supply and economic growth.
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