Stocks, crypto, and dollar crash rapidly while oil prices surge as Iran and Israel kick off their war

Markets across the board fell hard late Thursday after Israel launched airstrikes on Iran, kicking off what could become a larger regional conflict. The reaction was instant.

Dow futures dropped 400 points, or 0.9%, S&P 500 futures fell 1.1%, and the Nasdaq 100 sank 1.3%, according to CNBC. This happened right after Israeli Defense Minister Israel Katz imposed a nationwide emergency, warning that attacks on civilians were expected in retaliation.

Katz declared the special state of emergency across Israel after what he described as a preemptive strike. In his signed order, Katz said, “Following the State of Israel’s preemptive strike against Iran, a missile and drone attack against the State of Israel and its civilian population is expected in the immediate future… You must obey the instructions of the Home Front Command and the authorities and remain in the protected areas.”

Gold surges again as oil rises and dollar falls

Gold prices surged for a third straight day, jumping 0.8% after already gaining 0.9% on Thursday. As of 8:12 a.m. Singapore time, spot gold was trading at $3,406.61 per ounce. The Israeli Air Force had hit Iranian targets earlier in the day, Axios reported, citing two people with knowledge of the attack.

Other precious metals moved as well. Silver, platinum, and palladium all recorded gains. Meanwhile, the Bloomberg Dollar Spot Index dropped 0.1%, and the US Dollar Index ($DXY) slid to its lowest level since March 2022, reflecting how fast investors are fleeing the dollar for safe-haven assets.

The only market sector climbing with conviction was oil. Prices blasted through $72 per barrel without resistance, rising in a straight vertical line as traders braced for a wider war in the Middle East that could disrupt supply.

Asia markets mixed as Wall Street’s gains erased

Even though Wall Street had finished Thursday’s regular session in the green, everything turned red once news broke of the Israeli strikes. The Dow and the Nasdaq Composite both ended the day up 0.2%, and the S&P 500 closed 0.4% higher. That brought the index within 2% of its all-time high from February. But all that progress was wiped out hours later.

By Friday morning, investors in the Asia-Pacific region were already reacting. The Nikkei 225 in Japan lost 0.36%, and the Topix fell 0.43%. In South Korea, the Kospi added 0.38%, while the Kosdaq moved up slightly by 0.15%. Australia’s ASX 200 stayed flat. Meanwhile, Hong Kong’s Hang Seng futures traded at 24,178, slightly above Thursday’s close of 24,035.38.

The military operation was confirmed by NBC News, who reported that two US officials said the airstrikes were carried out by Israel alone, with no American involvement. That clarification came after investors feared the United States might get pulled into another war. For now, the White House hasn’t released any direct statement.