The dollar surged and European stock markets declined sharply on Monday after Iranian state-linked media reported that two missiles struck a U.S. warship attempting to transit the Strait of Hormuz. The reports, originally from Iran’s Fars News Agency, have not been independently verified by Western sources, but they triggered immediate risk aversion across global markets.
The dollar index, which measures the greenback against six major currencies, climbed 0.3% to 98.542, reflecting a flight to safe-haven assets. Meanwhile, European equities tumbled, with the pan-European STOXX 600 index falling 0.9% and the blue-chip Euro STOXX 50 dropping 1.7%. Bond markets also saw a sell-off, pushing yields higher. Germany’s 10-year bond yield, the benchmark for the eurozone, rose 5 basis points to 3.082%, as bond prices moved inversely to yields.
The Strait of Hormuz is a critical chokepoint for global oil shipments, and any disruption there can have immediate economic consequences. The alleged attack, if confirmed, would mark a significant escalation in the ongoing tensions between the United States and Iran. Analysts noted that the market reaction reflected heightened geopolitical risk, with investors rotating out of riskier assets like equities and into currencies perceived as safer, such as the dollar.
Earlier reports from Al Jazeera and other outlets had indicated that the U.S. Navy routinely conducts patrols in the region to ensure freedom of navigation. The incident, if verified, could lead to further confrontation and potentially disrupt oil supplies, driving energy prices higher.
In a related development, the dollar also benefited from a general sense of uncertainty, as traders weighed the possibility of further military engagements. The euro, meanwhile, weakened against the dollar, contributing to the dollar index’s rise. European stocks were under additional pressure from a downbeat session in Asia, where markets had already priced in some geopolitical risk.
The situation remains fluid, with world leaders calling for restraint. The United States has not yet officially commented on the reports, and independent verification is pending. Market participants are advised to stay tuned for further updates as the story unfolds.
Source: ARY News