Markets jolted after the US shot down an Iranian drone, even as talks between the two sides are still expected to take place on Friday.
This development reawakened nerves, with traders already on edge following last Friday’s historic moves in metals and watching closely for potential ripple effects across asset classes.
Cryptocurrencies and equities corrected sharply amid renewed risk deleveraging, hitting high-beta assets the hardest – Bitcoin breached the $75,000 level, erasing all of its gains since Trump’s appointment in November 2024 (but is closing the session back above the key level).
The risk-off move reignited demand for metals, with Silver surging 9% on the session and Gold rebounding toward the key $5,000 mark.
Meanwhile, the US partial government shutdown is ending early after a narrow 217–214 congressional vote approving $1.2 trillion in funding.
The headline helped calm the selling in markets, triggering a rebound in US equity indices and suggesting elevated fear rather than outright panic.
The US session ultimately closed with pronounced rebalancing flows: Tech and the Magnificent Seven struggled, while most traditional sectors staged a recovery.
With geopolitics, Kevin Warsh’s appointment to replace Powell, and fragile leveraged positioning all in play, traders have plenty to digest in the days ahead.
Elsewhere, the Royal Bank of Australia delivered a 25 bps hike to 3.85%, diverging largely from other central banks that are still cutting and leading to interesting FX developments.
Iran-related developments remain the top risk catalyst, with US–Iran talks still scheduled for Friday, barring further escalation.
