No panic! Oil prices narrowed rapidly, spot gold opened higher and then turned to decline, US stock futures narrowed

Following the U.S. airstrike on Iranian nuclear facilities over the weekend, Asian markets opened on Monday in a typical risk-off mode, though without panic selling.  

U.S. stock futures trimmed early losses, crude oil pared sharp gains, gold retreated from highs, and most Asia-Pacific equities declined:  

- S&P 500 futures initially fell ~1% before narrowing losses to ~0.4%;  

- Brent crude surged nearly 6% at the open but has since cooled, with both WTI and Brent now up less than 3%;  

- The USD strengthened against the euro and most major currencies;  

- The 10-year U.S. Treasury yield rose 2 bps to 4.396%;  

- Spot gold retreated ~$30 from intraday highs to $3,366.28/oz;  

- Bitcoin dropped 3%, briefly testing $99,000;  

- Most Asia-Pacific markets fell except India, with the MSCI Asia-Pacific Index down over 1%.  

**Geopolitical Developments**:  

- President Trump claimed on Truth Social that U.S. strikes "completely destroyed" Iran's Fordow, Natanz, and Isfahan nuclear sites, declaring "Fordow no longer exists."  

- On Sunday, Trump first floated the possibility of "regime change" in Iran—a shift from earlier U.S. official statements—posting: "Maybe ‘regime change’ isn’t politically correct, but if this regime can’t make Iran great again, why not change it?"  

- Israeli PM Netanyahu stated Iran’s nuclear/missile programs were "severely hit," with Israel’s objectives "nearly complete." He confirmed "significant damage" to Fordow and claimed Israel is tracking "400kg of 60%-enriched uranium."  

**Market Reaction**:  

Despite escalating tensions, markets remain relatively calm as Iran has yet to retaliate visibly. Investors are assessing risks of further escalation, particularly a potential blockade of the Strait of Hormuz—which analysts warn could send oil to $120-$150/barrel and trigger broader economic shocks.  

**10:00 Update**:  

Most Asia-Pacific markets extended declines, with the MSCI Asia-Pacific Index down >1%. Japan’s Nikkei fell 0.58%, South Korea’s KOSPI dropped 0.7%, while India’s SENSEX 30 bucked the trend, rising 1.3%.  

The following is an update of 8:30:

The market response is relatively restrained. Oil prices, gold and US dollar rose, while US stock futures fell
The sharp decline in the S&P 500 mini futures opened was quickly corrected. Futures initially fell 60 points or 1%, but the decline narrowed rapidly as investor sentiment stabilized. The latest trading price returns to the near 6,000 point level, just about 2% from the all-time high.

Similar reactions also occur on crude oil prices. WTI crude oil futures opened at one point and then fell back to $76, an increase of 2.95%. The spot spread of Brent crude oil has widened to $1.99 from $1.53 last Friday, a bullish pattern that shows concerns about tight spot supply.

"The market will closely monitor Iran's reaction, especially whether it will act to disrupt the Middle East's oil circulation directly or indirectly through its regional agents. If Iran blocks the Strait of Hormuz, even for only one day, oil prices could temporarily reach $120 a barrel, or even $150 a barrel," said Muyu Xu, senior crude oil analyst at Kpler Ltd.

The Iranian parliament has reportedly called for a closure of the straits, but such moves require clear approval from Supreme Leader Khamenei. Polymarket data shows that the market is expected to have a 35% chance of closing the Strait of Hormuz.

The dollar strengthened in early trading, with moderate gains against major currencies such as the euro. As of press time, the US dollar index rose 0.22% to 98.99. The dollar has risen by about 0.9% since the outbreak of the conflict, but the gains are still limited compared to the traditional safe-haven role of the dollar.

"The biggest trading theme at the moment is shorting the dollar," said Neil Birrell, chief investment officer at Premier Miton Investors. "No one likes the dollar. But traditionally it is a safe currency people seek during turbulent times, which may just turn the fate of the dollar."

In other foreign exchange, the Swiss franc is the only major currency that remains stable against the US dollar. The sharp drop in the yen reminds investors of the fiscal dilemma of Japan's consolidated debt to GDP ratio as high as 400%.

Gold prices soared and fell back after opening and are currently rising slightly, at $3,369 as of press time.

By contrast, Bitcoin has plummeted amid geopolitical turmoil. Bitcoin fell below the $100,000 mark, the first time since May, and Ethereum also fell sharply.

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