Global financial markets are experiencing sharp volatility amid the ongoing war between the United States and Israel against Iran. The key question remains: who are the winners and losers across financial instruments amid fears of a broader conflict, heightened uncertainty, and a lack of clarity regarding its duration and outcome?
First, when monitoring volatility indicators across equities, bonds, and oil, the strength of these fluctuations becomes clear:
- The VIX volatility index rose 10%, reaching 28.15 points yesterday — its highest level since November 20, 2025 — before closing at 23.56 points, reflecting elevated anxiety in U.S. equity markets.
• The MOVE index, which measures U.S. Treasury bond volatility, increased 6% yesterday, marking its highest level since November 24, 2025, signaling stress in U.S. bond markets.
• The OVX oil volatility index climbed 7% yesterday to 77.79 points, its highest level since March 8, 2022, highlighting growing uncertainty in oil markets.
Second, looking at the losers through financial instruments:
- Equity markets: As high-risk assets, equity indices across the United States, the United Kingdom, Europe, and Asia — including Chinese, Japanese, and South Korean markets — have declined.
- Bond markets: Global bond prices, particularly U.S. Treasuries, have fallen despite traditionally being considered safe-haven assets during geopolitical turmoil. However, they are not currently fulfilling that role due to the sharp rise in energy prices, which is expected to fuel inflation and potentially prompt the Federal Reserve to keep interest rates higher for longer — or even raise them further if inflation rises significantly and moves further away from the 2% target.
Two weeks ago, the Federal Reserve’s meeting minutes revealed that some policymakers may consider raising interest rates if inflation remains elevated. Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge, rose 3.0% year-over-year, exceeding both expectations and the previous reading. Core Producer Price Index (PPI) also increased 3.6% year-over-year, higher than expectations and above the prior reading of 3.3%, reflecting risks of entrenched inflation. In this context, U.S. Treasury yields across various maturities have risen notably, along with German, French, British, and Japanese government bond yields.
- Currency markets: Broad declines were observed across foreign currencies against the U.S. dollar, as the dollar remains a traditional safe-haven asset.
- Cryptocurrency markets: Cryptocurrencies such as Bitcoin and Ethereum have been trading in a sideways range for about a month, remaining below the key psychological levels of $70,000 and $2,000 respectively, with a downward bias, given their classification as high-risk assets.
- Precious metals markets: Although gold remains the traditional safe haven and is up approximately 20% year-to-date, it is currently facing selling pressure due to the strength of the U.S. dollar and the sharp rise in U.S. Treasury yields, which weigh on gold as a non-yielding asset. Nevertheless, its bullish momentum remains supported by underlying fundamentals, including geopolitical and trade tensions, continued central bank purchases, and expectations of higher inflation, making it an inflation hedge. As for silver, platinum, and palladium, they are currently under selling pressure, as their industrial usage makes them vulnerable to higher energy costs. The sharp increase in oil and gas prices negatively affects manufacturing activity by raising production costs, potentially reducing demand for these metals.
So, who are the biggest winners?
First, crude oil, which has risen approximately 37% year-to-date, reaching $85.12 yesterday — its highest level since July 19, 2024 — amid ongoing geopolitical tensions, war developments, and the closure of the Strait of Hormuz. The Strait is a vital artery for global energy markets, with nearly 20% of global oil demand and more than a quarter of seaborne oil trade passing through it.
Second, the U.S. dollar, as the Dollar Index climbed to 99.68 points yesterday — its highest level since November 28, 2025 — gaining roughly 1% year-to-date. This rise reflects expectations that interest rates will remain elevated for longer, or potentially increase further if inflation accelerates significantly, particularly amid sustained increases in energy prices that could further fuel inflationary pressures.
From a technical perspective, crude oil prices are showing a bullish crossover, known as a golden cross, between the 50-day moving average and the 200-day moving average, potentially signaling the continuation of the upward trend. The Relative Strength Index (RSI) is currently near 82, placing oil in overbought territory — the highest level since March 2022 — reflecting strong upward momentum. The positive directional movement indicator (DMI+) stands near 38, compared to around 8 for the negative directional movement indicator (DMI-). The wide gap between the two suggests strong buying pressure. Most importantly, the Average Directional Index (ADX) is around 39, indicating that the upward trend momentum remains strong.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
