Israel's recent air strikes on Iran and the subsequent retaliation have sent shockwaves through global markets, leading traders to seek protection amidst the uncertainty surrounding the conflict.

Stocks

The rise in tensions in the Middle East has had a significant impact on markets, with the Volatility Index spiking from 17.9 to 21.6 after Israel's airstrikes on Iran. However, market players are no strangers to volatility, and geopolitical moves often fade quickly when de-escalation talks begin. Despite a slight drop in the S&P 500 Index, the overall market volatility remains low.

Oil

Analysts had predicted that a strike could push oil prices above US$100 a barrel, leading to a spike in Brent and West Texas Intermediate crude's implied volatility. Panic buying of call options has driven bullish premiums to levels not seen since Russia's invasion of Ukraine in 2022.

Gold

Investors are turning to gold as a safe-haven asset amidst the geopolitical tensions, causing the SPDR Gold Shares ETF to reach its highest level since April 16. The rush into gold is reminiscent of the tariff turmoil in April, with investors also considering silver as a safe investment option.

US Dollar

Despite hitting a three-year low earlier in the week, the US dollar's decline seems to be stabilizing. The recent attack on Iran by Israel has not had a significant impact on the currency, which is already facing challenges due to domestic unrest and economic uncertainties in the US.