Stocks fall and oil jumps over 2% on prolonged Iran war fears

Global stock markets retreated and oil prices surged over 2 percent after President Trump on April 2 signaled the conflict with Iran would not see a quick resolution.

"The market is recalibrating for a prolonged period of geopolitical risk, not the swift resolution that was initially priced in," said David Stevens, a geopolitical strategist at Horizon Advisory, in a note.

The S&P 500 fell 1.5 percent in morning trade, while Brent crude, the global oil benchmark, rose 2.2 percent to $89.50 a barrel. Safe-haven assets rallied, with gold climbing 1.2 percent.

The sustained conflict threatens to keep oil prices elevated, adding to global inflationary pressures and potentially delaying expected interest rate cuts from central banks. Markets are now pricing in a higher risk premium for energy and defense-related stocks.

The president's comments, made during a press conference, dampened hopes for a de-escalation of the conflict that has unsettled markets for weeks. The primary concern for investors is the potential for disruption to oil supplies passing through the Strait of Hormuz, a critical chokepoint for global energy trade. The last major disruption in the region in 2019 saw oil prices spike more than 14 percent in a single day.

The move away from equities and into traditional safe havens reflects a classic risk-off scenario. Beyond gold, U.S. Treasury bonds also saw increased demand, pushing yields lower. The uncertainty is likely to weigh on corporate earnings, particularly for companies with high energy costs or significant exposure to global trade.

This article is for informational purposes only and does not constitute investment advice.