Published 9 March 2026

Stock markets around the world have extended losses into a second week as the US and Israel continue to strike Iran.

It’s important to remember that global stock markets are still near their highest-ever levels. The UK stock market (FTSE 100 Index) has fallen from its peak of 10,934 to 10,168 (as of Monday morning) but remains ahead of where it started the year (9,931).

Are these attacks different from before, when the US and Israel launched attacks against Iran in June last year?

The US and Israel attacked Iran in June last year, but those attacks were focused on nuclear sites. This time, the targets have been military facilities with a declared intent to ‘wipe out’ Iranian military capabilities, and, critically, the country’s leadership, including the killing of Ayatollah Ali Khamenei. His death, and the deaths of other senior officials, follows growing unrest among the Iranian people, especially the younger generation.

Public protests and the government’s harsh response led President Trump to tell Iranians, ‘now or never’ and ‘help is coming’. There is no doubt that the US and Israel would like to see a change in government in Iran, but what they would actually do to make it happen is unclear. It would likely depend on the Iranian people choosing to make a change themselves.

So far, there is no sign of appeasement from Iran. The naming of Ali Khamenei’s son as the new supreme leader is an act of defiance, and Israel has already indicated they see the new leader as a legitimate target.

The market reaction

The world’s markets have reacted negatively because of the impact on energy prices. Gulf state producers have either stopped or warned of the imminent cessation of exports due to the effective closure of the Straits of Hormuz, a narrow shipping lane between Iran and Dubai through which more than 20% of the world’s oil and liquified gas is transported.

As a result, the price of crude oil has surged beyond $100 a barrel for the first time since 2022. UK wholesale gas prices almost doubled in a matter of days. Higher energy prices lead to higher inflation, which makes it harder for central banks to continue cutting interest rates—a policy that bond and stock markets have been benefiting from recently.

About 80–85% of the crude oil passing through the Straits goes to Asian markets. The US is permitting India to purchase sanctioned Russian crude oil for a temporary 30-day period in an attempt to alleviate concerns, which is unlikely to please Ukraine.

How should investors react to such events?

Sudden falls in stock markets can be unsettling, and makes us question what we should be doing, if anything.

As always, the best advice for investing is to focus on your personal financial goals and avoid reacting to daily market news. Global stock markets process new information extremely quickly. Anything you see in the news or read online has likely already been included in asset prices.

It looks like the conflict will drag on for longer than the military strikes of last year, but as above, things can change quickly. It is new, unexpected information that moves markets, and since no one can predict the future, the best plan for individual investors is to stay focused on their long-term financial goals and reasons for investing.