How Markets Learned to Shrug Off Three Wars

In March 2026, a single disruption in the Strait of Hormuz was enough to panic the world. Crude oil surged 52%. The KOSPI fell 19%, the Nikkei 13%, India's Nifty 11.3% — a synchronized global selloff from one-theater shock ^[1]. That was peak sensitivity. Three months later, the same markets were hitting record highs with three flashpoints burning at once. By the last week of June, the United States and Iran had exchanged direct strikes — American missiles hitting ten Iranian military targets, Iranian ballistic missiles landing on U.S. bases in Bahrain and Kuwait ^[2]. Ukraine was flying 660 drones in a single night against Russian energy infrastructure, closing four airports and blacking out half of Crimea ^[3]. North Korea, which had been launching ballistic missiles through the spring, was now condemning joint U.S.-Japan military drills ^[4][5]. Yet over that same quarter, the S&P 500 rose 14.9%, the Nasdaq surged 21.4%, and the Dow closed at a record on June 30 — the largest quarterly gains since 2020 ^[6]. The KOSPI broke 9,000 for the first time in its history ^[7]. And gold, the asset people buy when they are afraid, fell 13% ^[6]. The desensitization was not instantaneous. It built in layers. By late April, gold had already fallen 11% from its January peak even as U.S.-Iran tensions intensified and Hormuz remained disrupted — the safe haven was drifting the wrong way ^[8]. In mid-May, gold briefly resumed its traditional role, surging past $4,700 an ounce when Trump called the Iran ceasefire

the Iran ceasefire was "on life support" — Donald Trump

^[9]. But by late June, with more kinetic escalation than May had produced, gold had plunged to roughly $4,040 an ounce — a complete inversion of the safe-haven dynamic within six weeks ^[10]. The same pattern showed up in equities. On May 27, U.S. strikes on Iran sank Asian markets — but only modestly, and oil actually plummeted 5.4% as investors anticipated a deal ^[11]. Markets were already shrugging off kinetic strikes within a single session. On June 9, the KOSPI rebounded over 8% in one day after Trump called for an Iran-Israel pause, recovering its entire drop from the preceding day's military strikes within 24 hours, led by semiconductor stocks ^[12]. What crowded out the geopolitical signal was not peace. It was two competing narratives powerful enough to override it. The first was an AI semiconductor earnings boom. On June 24, Micron announced $22 billion in customer commitments and its stock jumped 17% to a record. The same day, Iran was striking ships in Hormuz. The KOSPI and Nikkei closed at record highs ^[13]. A single earnings report overwhelmed three active military flashpoints. The second was Federal Reserve rate-hike expectations. On July 2, global markets declined after Fed Chair Kevin Warsh warned against rate cuts ^[14]. The selloff was driven by monetary policy, not by the preceding weekend's U.S.-Iran mutual attacks. Ed Yardeni, one of the most widely followed market strategists, attributed equity volatility entirely to Fed policy expectations on June 5, making no mention of the concurrent U.S.-Iran war ^[15]. The Fed signal mattered because oil-driven inflation pointed toward higher rates, and higher real rates suppress gold — which is why the classic safe haven fell during the most kinetic quarter of the year rather than rising ^[6]. Even on June 30, with the most kinetic weekend behind them, Indian markets moved on a hawkish Federal Reserve, not on missiles landing on U.S. bases ^[16]. Trump's framing of the exchange — strikes one day, talk of getting along the next — gave markets a template for treating military action as diplomatic signaling rather than escalation ^[2].

We hit them very hard... but we're getting along very well. — Donald Trump

A commodities strategist at Ingredient put it more bluntly.

This complacency is odd and clearly leaves significant upside risk if the supply recovery proves slow — or if we see significant re-escalation. — Ingredient

The case that markets were correctly pricing containment is not frivolous. A U.S.-Iran ceasefire framework did emerge, Hormuz shipping traffic quadrupled within a week, and oil collapsed from $126 to $71 a barrel ^[17]. Tanker traffic through Hormuz returned to pre-war levels by June 30 ^[18]. But the structural picture was darker than the price of oil suggested. The U.S. Energy Information Administration's own June 9 forecast showed OECD oil inventories heading to their lowest level since 2003 by December, with Hormuz unlikely to normalize until 2027 ^[19]. EIA Administrator Tristan Abbey noted that the global oil market had already undergone

Any scenario involving full restoration of inventories, production, and trade flows to pre-conflict levels must account for the partial restructuring of the global oil market that has already occurred. — Tristan Abbey

— meaning a ceasefire would not simply restore the pre-conflict order ^[19]. And the ceasefire framework that markets priced as containment was contested on the ground: Iran's Khatam al-Anbiya command warned that any vessel not following Iran's designated routes would face

Any failure to comply, deviation from the designated route, or disregard for the navigation protocols of the Islamic Republic of Iran in the Strait of Hormuz will be met with an immediate and forceful response from the armed forces, endangering the security of the violating vessels. — Khatam al-Anbiya Military Command

^[2]. Vice President JD Vance added that the U.S.

The thing I've learned from the President of the United States is whether friend or foe, you shouldn't trust anybody, you should trust people's actions. — JD Vance

^[20]. The compression of risk premia across three simultaneous flashpoints has not yet been tested by a genuine supply shock under these conditions. The June 25–28 strikes shattered the ceasefire in hours; the market recovered in days. The next disruption will arrive in a market that has already decided war is background noise — and the AI earnings and Fed signals that did the drowning out can turn against prices as easily as they turned for them.