Sunday, 14 June 2026 GMT+7 marks the 100th full day of the ongoing Middle East war, with no end in sight. Although both sides have sent mixed signals about peace talks progress and a temporary ceasefire remains in place to allow diplomacy to continue, sporadic military attacks persist.
Now entering its fourth month, the prolonged war's economic and financial market impacts have become increasingly evident across various sectors, from stocks, bonds, and oil to inflation rates in several major economies.
Initially, after the U.S. and Israel launched attacks on Iran, global stock markets plunged sharply. However, U.S. equities rebounded fully, with the S&P 500 recovering from early losses to reach an all-time high. Meanwhile, the Nasdaq index has climbed 18.5% since the conflict began.
Analysts note that capital markets have been dominated by the assumption that the war will push major energy-importing economies into stagflation. Yet, optimism about AI’s potential and strong profits from American companies have helped support the market.
Investment demand in AI infrastructure is creating new bottlenecks, especially due to surging processing power needs. This has heightened interest in semiconductor stocks, particularly in countries like South Korea and Taiwan, whose economic growth forecasts have been upgraded due to their critical roles in AI supply chains.
The top five best-performing stock markets are all in the Asia-Pacific region and the U.S. Leading the pack is South Korea’s Kospi, soaring 38.4%, followed by Taiwan’s TAIEX at 30.2%. These gains largely reflect the global rush into AI investment and the hot demand for semiconductor chips.
In the U.S., the Nasdaq Composite rose 18.5%, ranking third, with Japan’s Nikkei 225 up 16.2%. Completing the top five is the S&P 500, which gained 9.8%, fully erasing its early-war losses and achieving a new peak.
Conversely, European, Latin American, and South African markets have suffered. South Africa’s FTSE/JSE Top 40 fell the most, dropping 13%, followed by Brazil’s Sao Paulo Bovespa, down 9.8%. Analysts warn that if the Strait of Hormuz remains closed, inflation could accelerate further, potentially causing severe economic damage that markets cannot ignore.
Unlike resilient stock markets, global government bond markets have experienced heavy selling since the conflict erupted. U.S. 30-year Treasury yields hit their highest level since before the 2008 financial crisis, peaking at 5.18% in May 2026 before slightly retreating to around 4.97%. Among G7 nations, 10-year bond yields have risen across the board, led by the U.K. (+60.4 basis points), Japan (+55.9 bps), and the U.S. (+50.3 bps), while Canada posted the smallest increase (+28.7 bps).
Analysts caution that bond markets are signaling genuine concerns—not just about peak inflation or interest rates but about the duration these elevated levels may persist. If the current situation prolongs, the global economy could slow significantly, and high bond yields might hinder future stock market gains.
One of the conflict’s most significant effects has been the closure of the Strait of Hormuz, the world’s most vital oil shipping route. This caused oil prices to surge rapidly early in the war, with Brent Crude reaching a high of $118.35 per barrel before settling between $95 and $100 per barrel currently.
Factors limiting further oil price spikes include releases from strategic petroleum reserves (SPR), eased sanctions on Iranian and Russian oil, reduced Chinese demand, alternative shipping routes, increased U.S. oil exports, and demand destruction due to high prices. However, if global oil inventories continue to decline, prices could again surpass $100 per barrel.
The Strait of Hormuz closure and damage to Middle East energy infrastructure have caused severe supply disruptions. Although prices have fallen from peaks, they remain significantly above pre-war levels—Brent is approximately 36% higher and WTI nearly 50% higher. The U.S. benefits from increased oil exports, while countries worldwide face renewed inflation pressures driven by elevated energy costs.
The clearest economic impact of the war is accelerating inflation in many countries, primarily driven by energy costs. Since the conflict began in March, inflation rates in numerous nations have steadily increased.
Analysts observe that although the current situation remains worrisome, markets are responding less to conflict news, similar to patterns seen during previous U.S. trade wars or tariff increases.
Positive signs include historically low U.S. support for the war, and many analysts believe both sides are seeking acceptable solutions. Should such outcomes arise, oil prices and inflation could decline rapidly. However, as long as the Strait of Hormuz remains closed and peace talks stall, risks to the global economy remain high.
Overall, the first 100 days of the Iran war have not triggered an immediate recession but have clearly altered the global market balance in energy, inflation, bonds, and investment flows. The U.S. and countries involved in the AI supply chain have been the main beneficiaries, while energy-import-dependent nations continue to face sustained pressures.
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Source Information CNBC
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