Markets Stay Steady As Investors Bet On De-Escalation

Markets have remained calm following the weekend’s U.S. airstrikes on Iran’s nuclear infrastructure, carried out in support of Israel.

Higher oil prices could fuel inflation, making the case for rate cuts less compelling—even as President Trump pressures the Fed to ease monetary policy. I Photo: Majmood Hosseini, Tasnim News Agency

The lack of a sharp market reaction could reflect investor confidence that full-scale escalation will be avoided, Adam Clark reported for Barron’s Daily.

While Iran’s strongest retaliatory option—closing the Strait of Hormuz—could potentially drive oil prices past $100 per barrel, such a move would inflict more damage on Iran and its main oil buyer, China, than on the United States.

That calculus is helping to temper oil market volatility and demand for traditional safe-haven assets like gold.

Still, significant uncertainties linger: Was Iran’s nuclear enrichment program genuinely obliterated? Will Israel take further action? Might Iran choose partial rather than full disruption of oil shipping?

These unknowns are likely to weigh on the Federal Reserve’s decision-making.

Higher oil prices could fuel inflation, making the case for rate cuts less compelling—even as President Trump pressures the Fed to ease monetary policy. Fed Chair Jerome Powell is expected to address these issues in his upcoming congressional testimony.