Just now, a full-scale plunge! Israel, large-scale airstrikes on Iran!

The fog of the Middle East conflict shrouds financial markets.

On the afternoon of the 13th Beijing time, major European stock indices opened lower across the board, and U.S. stock index futures also plunged across the board. In addition, long-term government bonds in countries including the United States, the United Kingdom, and Germany were also hit by fierce selling. The ICE BofA Volatility Index, often referred to as the bond market’s “fear gauge,” rose to its highest level since June 2025. Some analysts said concerns about fiscal spending triggered by current Middle East tensions are sweeping through global bond markets.

Regarding the Middle East situation, according to the latest report from Xinhua News Agency, on the 13th the Israel Defense Forces issued a statement saying the Israeli military has begun a new round of “large-scale strikes” on infrastructure in Tehran, Iran’s capital. In its latest report, Goldman Sachs warned that, affected by the Middle East fighting, damage to Middle Eastern energy infrastructure, and disruptions to transportation through the Strait of Hormuz, the average Brent crude oil price in March is expected to exceed $100 per barrel.

European and U.S. markets plunge across the board

On the afternoon of March 13 Beijing time, U.S. stock index futures plunged across the board. As of 16:20, Dow futures were down 0.47%, Nasdaq 100 index futures were down 0.56%, and S&P 500 index futures were down 0.46%.

Major European stock indices opened lower across the board. The Euro Stoxx 50 index was down 1.13%, the UK FTSE 100 index was down 0.79%, France’s CAC40 index was down 1.19%, Germany’s DAX30 index was down 0.98%, and the FTSE Italy MIB index was down 1.18%.

Some analysts said the ongoing escalation of the Middle East conflict has intensified the sell-off in European and U.S. markets, and investors are worried that the resolution timeline for the Middle East conflict may be delayed further.

It is also worth noting that long-term government bonds in the United States, the United Kingdom, Germany, and Japan were hit by another round of selling.

On Friday, the yield on U.S. 30-year Treasury bonds rose to nearly 4.90%, setting a new high in nearly a month. Since the outbreak of the war on February 28, the yield has risen by more than 20 basis points, wiping out all of this year’s gains in U.S. Treasuries. The Bloomberg-tracked index of U.S. Treasury returns’ year-to-date return has nearly returned to zero.

In addition, the ICE BofA Volatility Index, often referred to as the bond market’s “fear gauge,” rose to its highest level since June 2025.

Bond yields in countries including the United Kingdom, Germany, Australia, and Japan also surged across the board, with long-term government bonds generally under pressure.

Gang Hu, Managing Partner at Winshore Capital Partners, said that the rise in long-end yields reflects the market’s expectations that the Trump administration will need to spend money to pay for the war and subsidize consumers facing high oil prices.

According to Xinhua News Agency, on the 12th Jules Hurst, Acting Comptroller General of the U.S. Department of Defense, said the United States spent about $11 billion last week on military operations against Iran. This is the first time the U.S. government has publicly estimated the cost of the conflict.

The website of Politico reported that on that day Hurst disclosed this “rough estimate” at a defense meeting in the U.S. capital, Washington, D.C. He also said that the Office of the Comptroller of the Department of Defense is preparing a more specific figure for an application for additional budget, with the plan to submit it to the White House and the U.S. Congress within a few days.

The Center for Strategic and International Studies estimates that in the first 100 hours after the outbreak of the conflict, the costs of air and maritime strikes were about $3.7 billion. The conservative think tank, the American Enterprise Institute, believes the cost so far is between $11.2 billion and $14.5 billion.

In Europe, governments are facing a dual pressure: higher defense spending and potential energy subsidies. This week, European Commission President Von der Leyen proposed a number of measures, including a natural gas price cap. Andrzej Szczepaniak, a senior European economist at Nomura Securities, analyzed that European governments may replicate the response path taken during the 2022 energy crisis by financing crisis-related spending through issuing joint bonds via the European Union, which would create structural pressure for the eurozone bond market.

Chris Arcari, Head of Capital Markets at Hymans Robertson, pointed out that compared with the energy crisis triggered by the 2022 Russia-Ukraine conflict, governments currently have less fiscal room, with both debt burdens and interest costs already higher. This time, the bond market may be less willing to “buy into” such a large-scale fiscal expansion, and at least would require higher real yields as compensation.

Israel carries out large-scale airstrikes on Iran

Regarding the Middle East situation, according to Xinhua News Agency, the Israel Defense Forces issued a statement on March 13 saying that the Israeli military has begun a new round of “large-scale strikes” on infrastructure in Tehran, Iran’s capital.

In addition, according to reports from Iranian media, multiple explosions were heard in western Tehran on the same day.

In the morning of March 13 local time, the Israel Defense Forces released a statement saying that over the past day, the Israeli Air Force dispatched dozens of fighter jets to carry out 20 large-scale airstrikes on western and central Iran, striking more than 200 Iranian targets. These included ballistic missile launch installations, air defense systems, and weapons production facilities.

The Israeli military said that since the start of its strike campaign against Iran at the end of February, the Israeli Air Force has carried out hundreds of airstrikes on Iranian targets in order to weaken Iran’s capability to conduct missile attacks against Israeli territory.

With the Strait of Hormuz blockade layered on top of the Middle East conflict’s impact, Goldman Sachs expects Brent crude oil’s average price in March to break into three digits. At the same time, it warned that prices may gradually fall back in the second half of the year.

According to Reuters, Goldman Sachs said on Friday (March 13) that, affected by the Iran war, damage to Middle Eastern energy infrastructure, and disruptions to transportation through the Strait of Hormuz, it expects Brent crude oil’s average price in March to exceed $100 per barrel, while the April average will fall to $85.

Although oil prices may face upward pressure in the near term, Goldman Sachs is relatively cautious about its full-year price outlook. If disruptions to oil flows do not worsen further, it expects Brent crude oil prices to gradually decline to the low $70 range by the end of the year.

As of 16:20 Beijing time on the 13th, Brent crude oil futures were up 1.71%, at $102.18 per barrel, with this week’s cumulative gain exceeding 8%. WTI crude oil futures were up 1.79%, at $97.46 per barrel, with this week’s cumulative gain exceeding 7%.