Global markets reacted sharply to the eruption of hostilities between the United States and Iran, with Brent crude climbing by more than 7% and gold rising about 2.0% in early trading on Monday, according to a new analysis from Macquarie. The banks strategists describe the conflict as a pronounced negative supply shock, prompting investors to rotate out of riskier assets and into so-called hard assets.
The immediate market response extended beyond commodities. Major European stock indices fell on average by more than -2.0%, while U.S. index futures were trading lower by over -1% in the early hours as participants attempted to assess how long the hostilities might persist. In Macquaries view, the disruption to markets is not limited to the direct physical risk to production capacity.
Analysts Thierry Wizman and Gareth Berry highlight non-physical channels that are already exacerbating price pressure. Those channels include the phenomenon of hoarding and a sharp rise in insurance premiums for vessels traversing the Strait of Hormuz - insurance costs that Macquarie reports have risen between 25% and 100% for that route. Together, these forces are contributing to what the firm characterizes as a potent inflationary cycle.
Macquaries report draws attention to a widening divergence in the economic outlook between net oil importers and exporters. Historically, supply-driven spikes in oil prices tend to bring fast and persistent employment losses in economies more dependent on Persian Gulf supplies. The report singles out Japan, China and countries across Europe in this category, noting that they are likely to be more exposed to employment and output weakness driven by higher energy costs.
India is identified as "particularly vulnerable," with the report noting that 85% of its imported oil comes from the Persian Gulf region. By contrast, the analysis points to countries with significant reserves and export capacity - explicitly naming Brazil, Canada and Norway - as better positioned to maintain strong output despite the inflationary environment.
Macquarie also cautions that the U.S. is not insulated from a more prolonged slowdown. Drawing a parallel with the First Persian Gulf War of 1990-1991, the report warns that elevated oil prices can interact with pre-existing financial vulnerabilities - including over-leverage in private credit markets and weak household sentiment - to precipitate a genuine recession. The firm suggests that the war-driven inflationary impulse may prompt the Federal Reserve to adopt a more hawkish monetary stance than previously expected, though it acknowledges the high political sensitivity around policy-rate decisions.
Beyond near-term growth and inflation dynamics, the report addresses longer-run implications for the U.S. Dollar. Macquarie ties the dollars next five-year trajectory to perceptions of U.S. success in this military engagement. The bank notes that the Greenback historically strengthened for a decade following the First Persian Gulf War, whereas during the War on Terror in the 2000s the dollar struggled amid weak international support and a protracted fall in its real value.
Looking ahead, Macquarie expects a brief period of dollar strength in the first half of 2026 driven by safe-haven demand. However, the firm expresses limited optimism about the currencys long-term prospects. It argues that even a successful regime change in Iran could be interpreted as a challenge to the rules-based global order, prompting reserve managers to continue reducing U.S. Dollar holdings. The bank warns that such dynamics could accelerate the uptake of alternative settlement mediums, with the Chinese Yuan cited as a potential beneficiary of a shift away from dollar-dominated reserves.
Macquaries assessment frames the conflict as both a near-term shock to energy and financial markets and a possible catalyst for longer-term shifts in reserve allocation and currency preferences. The combination of higher commodity prices, rising shipping and insurance costs, and the threat of amplified financial fragilities forms the backbone of the firms warning about an inflationary shock that could reverberate unevenly across regions and sectors.