Fed Tightening and Middle East Tensions Drive Global Markets Down

Global equity markets retreated on Tuesday as investors priced in aggressive Federal Reserve tightening amid renewed US-Iran military clashes.

The clashes sent Brent crude prices above $90 per barrel, stoking inflationary concerns across advanced economies and triggering a broad flight from risk assets.

Oil prices extended gains as Washington and Tehran exchanged threats following ballistic missile strikes on American air bases in Jordan. US President Donald Trump said Washington will retaliate against Iran after the attacks, raising fears of prolonged disruptions to energy flows through the Strait of Hormuz.

Russia's decision to extend its diesel export ban through September 30 added further pressure on refined fuel supplies, contributing to the inflationary backdrop that has unsettled fixed-income investors and complicated monetary policy calculations for central banks worldwide. The US dollar rose 0.1% to 99.5 against a basket of currencies.