Markets Open Mixed Following U.S. Strikes on Iran: Geopolitical Risks Resurface

Equity markets opened the week with mixed signals as investors around the world digest the weekend's major geopolitical development—a U.S. military strike on Iranian nuclear facilities. While the immediate reaction across equity indexes has been restrained, underlying risk sentiment has shifted sharply.

Wall Street ended last week with a whimper, and Monday has opened with choppy price action across asset classes. The Dow Jones Industrial Average (DJI) gained slightly by 0.1%, while Asian indices such as the HK50 rose 1.1%.

The USDJPY pair surged 0.9%, reflecting risk-off sentiment, while oil and gold edged slightly lower, indicating that the market is still gauging the seriousness of the conflict escalation.

For Nigerian investors, this is a critical time to assess how these developments may influence the local market—from oil revenues and inflation to foreign investor sentiment and naira valuation. Let's break down the latest market moves and what they could mean for Nigeria.

U.S. Strikes Iran's Nuclear Sites: Global Risk Repriced

Over the weekend, the U.S. launched targeted strikes against Iranian nuclear facilities, citing intelligence concerns over Iran’s enrichment activities and retaliation for attacks on allied infrastructure in the region.

While no full-scale conflict has emerged (yet), this marks a serious escalation in the long-standing U.S.-Iran standoff. Investors are watching for Iran’s response, particularly in the oil-producing Strait of Hormuz—through which nearly 20% of global oil passes daily.

Market response so far:

Commodities: Brent and WTI crude futures are both down slightly by 0.2%, reflecting an initial wait-and-see approach rather than panic buying.
Gold (XAUEUR) dropped 0.1%, a surprise given rising geopolitical tension, which suggests that traders may be rotating into currencies like the U.S. dollar and Japanese yen instead.
USDJPY rallied 0.9%, highlighting strong demand for dollar-denominated safe-havens.

Tech Sector in Focus: Tesla, Nvidia in the Spotlight

Even amid macro shocks, tech news continues to shape investor sentiment:

Nvidia shares declined by 1.1%, underperforming major indices, after reports revealed NVentures, Nvidia’s venture capital arm, is backing TerraPower, a Bill Gates–co-founded nuclear startup focused on powering AI data centres using next-gen nuclear energy.

Investors may be skittish about Nvidia's exposure to nuclear technology in the current geopolitical climate, especially as energy projects become potential targets in wartime settings.

Tesla shares were flat, with eyes on the company’s robotaxi launch in Austin, Texas, on June 22. Investors are cautious but optimistic, viewing the rollout as a pivotal moment for autonomous driving.

For Nigerian investors trading U.S. stocks through platforms like Trove, Chaka, or Risevest:

Watch for volatility in U.S. tech as market perception shifts in real time.
This could present buy-the-dip opportunities in high-quality tech stocks with long-term upside.
Tesla’s robotaxi rollout may be a catalyst stock for Nigerian retail traders to track.

Forex Markets: Dollar Dominance Resumes

In forex trading today:

EURUSD and GBPUSD are both down by 0.1%
AUDUSD slumped by 0.7%, reflecting broader risk-off sentiment and commodity price uncertainty
USDJPY’s nearly 1% rally marks a notable safe-haven rotation

This renewed strength in the dollar may be a double-edged sword for Nigeria.

Implications:

A stronger dollar could pressure the naira, increasing costs for imports and fuel subsidies.
Nigeria may face higher debt servicing burdens, particularly for external obligations priced in USD.
CBN’s forex management could be tested if geopolitical tension persists and global risk appetite weakens further.

Oil Prices Tread Water – Nigeria’s Revenue in Question

Despite the dramatic headlines, oil prices have not surged. Both Brent crude and WTI are down 0.2%, which could reflect a market that is either sceptical of prolonged supply disruption or confident that other OPEC producers can compensate.

However, this muted reaction might change if Iran retaliates or supply lines are threatened directly.

For Nigeria:

Every $1 move in oil affects the national budget. Nigeria's 2025 budget benchmark assumes oil at $77/barrel. A decline could put pressure on the fiscal deficit, FX reserves, and petrol subsidy bill.
Lower prices could also discourage investment in Nigeria’s offshore oil projects, which need higher break-even prices to attract capital.

Investors should watch Brent’s technical levels near $83 as a critical support zone. A breakdown below that could trigger a wave of repricing in Nigeria’s oil-related equities and FX expectations.

Nigeria-Specific Outlook: What to Watch This Week

CBN Policy Responses

Any strong move in the USD or Brent could prompt CBN intervention in FX markets, especially as we approach mid-year economic reviews.
Watch for changes in monetary policy tone, especially if inflationary pressures mount from imported costs.

Naira Movement

A stronger dollar and lower oil revenues could put pressure on both the official and parallel market exchange rates.
Importers and exporters should hedge their currency exposures where possible.

Nigerian Equities

Energy and bank stocks may show some resilience, particularly if rising geopolitical risk leads to capital flight toward dividend-paying blue chips.
Telecoms and tech-adjacent stocks could benefit if digital infrastructure investment accelerates as part of a broader "risk-off" investment shift.

Mixed Market, Mixed Messages—But Risks Are Real

The global financial markets are treading cautiously, balancing the aftermath of a military strike with economic fundamentals and central bank signals. While equity and currency moves are not extreme yet, the risks under the surface are rising.

For Nigerian investors, this is a crucial time to stay informed, manage currency risk, and remain vigilant for market-moving headlines. As always, diversified portfolios, dollar-cost averaging, and a focus on long-term trends will remain key strategies in navigating uncertain terrain.

Disclaimer:
This article is provided for informational purposes only and does not constitute investment advice, financial recommendation, or a call to action. Always consult a licensed financial advisor before making any financial decisions. Past performance is not indicative of future results.