Global markets tumble as US‑Iran strikes lift oil above $90 and fuel Fed rate‑hike bets

Renewed U.S.-Iran strikes near the Strait of Hormuz pushed oil above $90 a barrel, while a separate hawkish turn from Fed Chair Kevin Warsh lifted September rate-hike odds to about 60%. Together the two catalysts pressured Asian and U.S. equity futures and Indian government bonds, even as energy stocks, and several U.S. megacap tech names, actually gained. Indian IT stocks bore the brunt of the rate-hike repricing.

On August 31, 2026, renewed U.S. strikes on Iranian rocket launchers near the Strait of Hormuz, and Iran's retaliatory strikes, sent crude sharply higher, with oil climbing above $90 a barrel. The flare-up dragged Asian equities lower as investors weighed the conflict alongside a separate, hawkish turn from the Federal Reserve.

That rate-hike repricing traces to Fed Chair Kevin Warsh's Jackson Hole remarks that policymakers still "have work to do" on inflation, not to the Iran strikes themselves. Traders now price roughly a 60% chance of a September hike, up from about 35-41.4% before Warsh spoke, per Reuters.

In the U.S., futures for the S&P 500, Dow and Nasdaq all slipped on the combined oil shock and firmer Fed outlook. European shares mirrored the caution, with energy names gaining on the oil rally even as broader sentiment stayed negative. Indian government bonds fell to a discount on the same rate repricing, with the benchmark 6.94% 2036 bond yield rising to 6.9480% from Friday's 6.9108% close, per Business Recorder.

Energy stocks led gainers as oil surged, with CVX up 2.15% and XOM up 2.13%. U.S. megacap tech did not retreat: Intel and Nvidia gained on the same energy-led tape (Intel +1.3%, Nvidia +0.6%, per Blockonomi), and Apple also traded higher. Indian IT stocks were the exception, falling on the rate-hike bets, with the Nifty IT index down about 1.8%.

Analysts note the Iran conflict and the Fed's hawkish pivot are compounding independently, which could keep volatility elevated. Investors will watch for further Middle East escalation and Fed commentary ahead of the September meeting, since either could still move oil prices and capital flows.