On October 26, Israel launched a targeted attack on an Iranian missile production site in response to a ballistic missile attack, killing one civilian and four IRGC soldiers, according to multiple reports. This followed a major assault on October 1, when Iran launched approximately 180 ballistic missiles at Israel, with many intercepted by Israel and a U.S.-led coalition, though some struck central and southern Israel and damaged air bases. Israel and the United States have reprimanded Iran and threatened severe retaliation, including possible direct attacks on Iranian oil facilities. According to Israeli intelligence, Tehran is expected to launch a counter-attack from Iraq in early November.
The current hostilities have deep roots in a series of escalations since April. On April 1, Israel allegedly attacked the Iranian consulate building in Damascus, Syria, killing 13 people, including seven IRGC members. In response, Iran launched Operation True Promise, a massive aerial attack on Israel involving over 120 ballistic missiles, 30 cruise missiles, and 170 drones, with the U.S. intercepting many from bases in Syria, Iraq, Jordan, and Yemen. Later in April, the Israeli Air Force launched airstrikes targeting an S-300 air defense facility in Isfahan, Iran, causing no extensive damage. The conflict has also drawn in regional proxies, with Iran's allies, including Yemeni Houthis and Lebanese Hezbollah, exchanging missile attacks with Israel, involving Israel in a multifront battle.
Israel has expanded its military operations beyond Iran. In September, Israel initiated Operation Northern Arrows, a ground invasion into Lebanon as part of the Israel-Hezbollah conflict. On September 27, Israeli aircraft attacked residential buildings in southern Beirut using bunker buster bombs in an attempt to kill Hassan Nasrallah. This comes amid an ongoing armed conflict between Israel and Hamas-led Palestinian militant groups in Gaza and Israel since October 7 last year. In July, Israel assassinated Ismail Haniyeh, Hamas's political leader, in Tehran during the inauguration of Iranian President Masoud Pezeshkian.
The United States has bolstered its military presence in the region following the Israel-Iran conflict, stationing B-52 Stratofortress bombers and F-15 fighter jets. U.S. and Israeli forces have struck approximately 6,000 targets, including key military sites, nuclear facilities, oil refineries, and storage depots. The Iran conflict launched on February 28 is gathering steam with few signs of tapering off, according to multiple reports.
The escalating war has rattled global financial markets. The S&P 500 has slid almost 3% since the U.S. and Israel deposed the Iranian leadership regime, and the VIX broke 30 for the first time in almost a year. Technology represents 33% of the S&P 500, and its recent pullback has weighed on the index's overall return. As of Monday morning, 10 days into the conflict, the FTSE 100 was at 10,124 points, down 1.6% in early trading and 7.3% from its all-time peak.
Despite the downturn, broader stock market performance shows mixed signals. The equal-weighted S&P 500 is up 9.4% after closing at an all-time high on Friday, and small- and mid-cap stocks are up around 10%, while international developed stocks have risen 12.9%. Additionally, 68% of S&P 500 companies have beaten the index return since October 29. Treasury yields have also fallen, with the 10-year Treasury dropping to 3.94% on Friday, below its peak of 4.8% in January 2025, and the two-year Treasury falling to 3.37%, the lowest since August 2022.
Asian stock markets fell sharply, with South Korea's Kospi down 6%, Japan's Topix down 3.8%, Taiwan's Taiex down 4.4%, Hong Kong's Hang Seng down 1.9%, and China's CSI 300 down 1%. Global commodity prices are set to fall to a five-year low in 2025 amid an oil glut, with prices remaining 30% higher than pre-COVID levels. The global oil supply is expected to exceed demand by 1.2 million barrels per day in 2025, with OPEC+ having 7 million barrels per day of spare capacity.
Oil prices have experienced significant fluctuations due to the conflict. Oil prices rose by more than 4% to about $75 a barrel on Tuesday as Israeli troops moved into Lebanon and Iran launched a missile attack on Israel. However, Brent crude is expected to average $73 in 2025 if conflict does not intensify, down from $80 in 2024. Iran supplies about 3 million barrels of oil per day, or 3% of world output, and controls the Strait of Hormuz, handling 20 million barrels per day. Analysts at Capital Economics described that closing the Strait of Hormuz could drive oil close to $100 a barrel, but Iran is unlikely to do so for long due to potential U.S. military response, according to www.theguardian.com.
Inflation continues to hover above the Fed's 2% target, with recent core PCE data showing 3% year-over-year in December 2025, unchanged from the end of 2024. Financial advisor sentiment fell to minus-8 in April, the lowest in nearly a year, due to the war in Iran and concerns over Trump administration policies. Advisors report client concerns about the Middle East conflict, rising costs, and market volatility. Tricia Wu and William Connor noted that annuities can provide stable income during market volatility.
Amid the turmoil, the Financial Times offers a subscription trial of €1 for 4 weeks, according to major media reports. After the trial, the subscription costs €69 per month, providing complete digital access to quality FT journalism on any device. Cancellation is allowed anytime during the trial, and users should check whether they already have access via their university or organisation, with Terms & Conditions applying to the subscription. The Financial Times offers plans for individuals and for multiple readers, including digital access for organisations with exclusive features and content, and users can discover all the plans currently available in their country.
In U.S. politics, Donald Trump won 300 electoral votes, surpassing the 270 needed to win the presidency, and became the only second leader to serve non-consecutive tenures, according to research. S&P 500 returns from 2021-2026 are listed as 16.4%, -7.7%, 30.5%, 18.4%, and 17.0% respectively.
Key uncertainties remain in the conflict. The current status of the Iranian leadership regime and whether it has been deposed as reported has not been independently confirmed. Specific retaliatory actions by Israel and the U.S. following Iran's missile attacks are unclear, and casualty details and damage assessments from recent military exchanges are still emerging. The exact terms and conditions of the Financial Times subscription plans are not detailed in available reports, and the current state of the Strait of Hormuz and whether Iran has taken any actions to disrupt oil flow remains unknown.