Global Stock Market Reaction to the Middle East Conflict

The conflict in the Middle East began after US–Israel strikes on Iran on 28 February 2026, triggering an immediate reaction across global financial markets. Investors grew concerned about potential disruptions to oil supplies and the risk of rising global inflation.

Stock markets worldwide experienced significant volatility, marked initially by a sharp sell-off. This was followed by mixed and cautious trading as investors evaluated the possible impact of the conflict on global energy supplies and economic stability.

As the conflict entered its 17th day, global equity markets had declined broadly but did not experience a complete collapse. US markets, for instance, had fallen by roughly 4% since the start of the conflict.

Immediate Market Reaction in India

India also witnessed considerable volatility in its financial markets. The Sensex dropped by more than 1,000 points, resulting in substantial losses in market value.

Overall, nearly Rs 22 lakh crore of investor wealth was wiped out, and more than 400 stocks recorded sharp declines. However, energy and defence companies registered gains, supported by rising oil prices and increased demand linked to geopolitical tensions.

Market Trends

First Day of the Middle East Conflict

Immediate market reaction: Panic selling and a global sell-off.

Oil prices surged sharply due to fears of disruption in supplies through the Strait of Hormuz, an important global oil shipping route.

Market Reaction of Markets on the first day of the Middle East Conflict

Index	Market Reaction
USA (New York Stock Exchange)
Dow Jones Industrial Average	Fell about 521 points in early trading
S&P 500	Declined around 0.43%
Nasdaq Composite	Dropped about 0.92%
Pan European Stock Exchange
Stoxx 600	Closed nearly 1.7% lower, after dropping as much as 1.6% in early trading
United Kingdom
London Stock Exchange (LSE)	Closed 1.2% lower
France
CAC 40	Fell by approximately 1.4% to 2.4%
Japan
NIKKEI	Declined by more than 2% during trading
China
Shanghai Stock Exchange	Showed resilience and rose 0.47% to 4,189.59, reaching a 10-year high
Hong Kong
Hang Seng Index	Fell between 2% and 2.8% in early trading
India
Bombay Stock Exchange (BSE)	Fell over 2,700 points to 78,543 in early trade
NIFTY 50	Dropped more than 450 points, falling below 24,000
South Korea
KOPSI Index	Plunged over 12.1%, marking the steepest decline since the 9/11 attacks in 2001

Middle East Conflict – 15th Day (Mid-March Trends)

Global equity markets continued to remain under pressure as crude oil prices stayed above $100 per barrel.

Index	Market Reaction
USA (New York Stock Exchange)
Dow Jones Industrial Average	Rose about 0.8% (388 points) to around 46,946
S&P 500	Gained about 1% (67 points) to 6,699
Nasdaq Composite	Increased about 1.2% (269 points)
Pan European Stock Exchange
Stoxx 600	Down nearly 6% since the start of the war, reflecting continued pressure on European assets
United Kingdom
London Stock Exchange (LSE)	Declined approximately 5.3% overall
France
CAC 40	Fell about 1–1.2% during the second week of the conflict
Japan
NIKKEI	Mostly flat to slightly negative, declining around 0.2%
China
Shanghai Stock Exchange	Declined slightly by 0.1–0.3%
Hong Kong
Hang Seng Index	Fell around 1.2%
India
Bombay Stock Exchange (BSE)	Dropped 845 points (1.14%) to about 73,400
NIFTY 50	Closed below 22,300
South Korea
KOPSI Index	Declined about 0.5% as cautious sentiment persisted

Market Winners and Losers Due to the Middle East Conflict

The primary economic factor driving sectoral shifts has been the sharp rise in crude oil prices above $100 per barrel and potential supply disruptions from the Middle East.

Winners

Oil and gas companies
Defence manufacturers
Gold and other safe-haven assets
Certain shipping companies

Losers

Airlines
Oil marketing companies
Automobile manufacturers
Paint, chemical, and fertiliser companies
Travel and tourism sector
Logistics and transportation companies

Impact on the Indian Rupee

The conflict has also put significant pressure on the Indian currency. During the escalation of the war in March 2026, the Indian rupee weakened to around Rs 92.3–Rs 92.5 per US dollar, approaching its historic low levels.

Analysts Warn that it will be a “brutal April” if the conflict does not stabilize

Analysts have cautioned that April could be extremely challenging for financial markets if the conflict fails to stabilize. Investors remain concerned that any disruption in the Strait of Hormuz could cause prolonged economic damage, with some experts warning of the possibility of a “brutal April” should the tensions continue.