Investors already rattled by artificial-intelligence disruption and hotter-than-expected inflation are bracing for fresh volatility after the U.S. and Israel launched military strikes on Iran aimed at disrupting its nuclear program.

President Donald Trump confirmed the operations in a video message, saying the objective was to eliminate imminent threats from the Iranian regime.

With traditional markets closed, cryptocurrencies offered an early read on sentiment. Bitcoin slid more than 3%, reflecting immediate risk aversion as traders awaited the reopening of Asian markets.

Oil and Gold Lead the Initial Reaction

Michael Brown, senior research strategist at Pepperstone, said markets are likely to follow a “relatively predictable” geopolitical playbook.

Crude prices had already begun climbing as tensions escalated, and Brown expects a sharp move higher when full trading resumes — particularly given Iran’s role as a major oil producer and its proximity to the strategic Strait of Hormuz, a critical artery for global energy shipments.

Gold is also expected to attract safe-haven flows. The precious metal recently posted its strongest monthly gain in over a decade, underscoring investor appetite for defensive assets during periods of uncertainty.

In addition to gold, Brown said the Japanese yen, Swiss franc and U.S. Treasurys are likely to outperform as investors seek safety.

Equities Face Near-Term Headwinds

U.S. stocks had already been under pressure following a surprise spike in producer prices. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all retreated before the weekend escalation.

Brown cautioned that equities will likely “face headwinds” in the immediate aftermath of the strikes. However, he also noted that geopolitical shocks historically do not trigger prolonged market downturns.

“Geopolitical events tend not to be a trigger for durable or longer-lasting market moves in any asset,” Brown wrote, while acknowledging that uncertainty remains elevated given the fast-moving situation and the unknown scope of potential Iranian retaliation.

Unknowns Cloud the Outlook

Key questions remain unresolved: the extent of damage to Iranian facilities, whether oil infrastructure was targeted, and how Tehran might respond. The Associated Press reported that initial strikes hit areas near offices tied to Iran’s leadership.

Iran controls territory near the Strait of Hormuz, through which a significant portion of global crude exports pass. Any disruption to that corridor could amplify energy price volatility and intensify inflation concerns worldwide.

In his remarks, Trump indicated the campaign could extend beyond initial strikes, pledging to dismantle Iran’s missile capabilities and naval forces while calling on the Iranian public to challenge their government.

Shock vs. Structural Impact

While the immediate reaction points to higher oil and gold prices and pressure on equities, strategists emphasize that markets typically stabilize once the initial shock is absorbed.

The broader risk lies in escalation. If hostilities disrupt energy supply chains or trigger sustained regional instability, market volatility could prove more persistent.

For now, investors are preparing for a classic risk-off rotation: equities under pressure, energy and havens bid — at least until clearer signals emerge about the scale and duration of the conflict.