Stocks Slide as Iran Conflict Escalates, Oil Spikes

– By Mr. Devarsh Vakil, Head of Prime Research at HDFC Securities.

MUMBAI, 14^TH JULY: Major U.S. stock indexes closed lower on Monday as a fresh escalation between the U.S. and Iran rattled investor sentiment. The Nasdaq led the decline, falling 1.6%, while the S&P 500 and Dow Jones Industrial Average slipped 0.8% and 0.3%, respectively.

The selloff came after the U.S. military carried out a third consecutive night of strikes on Iran, following President Trump’s reinstatement of a naval blockade and a proposed 20% fee for protecting commercial shipping through the Strait of Hormuz. Weekend military exchanges near the strait triggered a broad risk-off move, with investors rotating out of speculative and growth-oriented assets.

Shipping through the Strait of Hormuz has slowed sharply amid the hostilities. Data show just 14 vessels — including four crude tankers — transited the strait on Sunday, down nearly 60% from 37 a week earlier.

Crude oil jumped on news of the blockade, with Brent trading near $85 a barrel for the first time in a month. Both the U.S. and Iran claimed control of the waterway, stoking fears of energy-driven inflation and its knock-on effect on interest rates.

Treasury yields reflected the inflation concerns: the 2-year note rose to 4.27%, its highest since February 2025, as a hawkish tilt from Fed Chair Kevin Warsh and rising energy costs pushed back expectations for near-term rate cuts.

The Indian rupee weakened sharply, depreciating by 30 paise to close at 95.62 against the US dollar amid rising crude oil prices and renewed geopolitical concerns. As a major oil-importing currency, the rupee remained under pressure and was the weakest among Asian peers.

Nifty opened sharply lower by 168 points yesterday but staged a strong intraday recovery, rebounding over 250 points from the early low of 24,000 to completely erase the intraday losses.

The range of 24,300 on the upside and 24,000 on the downside remains crucial. A decisive breakout above 24,300 could trigger an up move towards 24,530, the previous swing high, while a breakdown below 24,000 may lead to a retest of the 23,800-support zone.

Markets will track developments in the Middle East, movements in crude oil prices and stock-specific triggers through the session.

Indian markets are set to open lower today, tracking weaker Asian cues as surging crude oil prices amid rising geopolitical uncertainty weigh on sentiment.

(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing.)

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