Following airstrikes by the US and Israel on Iran over the weekend, US stocks dipped in early trading and experienced significant volatility before closing flat. Bitcoin surged to $70,096 last night, driving a broader rally in the cryptocurrency market. Increased ETF inflows and buying interest provided fundamental support, while the Fear & Greed Index recovered slightly to 15.

Middle East Conflict Continues, US Stocks Close Flat

As the conflict in the Middle East continues to escalate, investors sought safe-haven assets, boosting the US Dollar and Gold prices. Energy and defense stocks moved higher, along with tech companies holding strong balance sheets, while airline stocks fell.

The near-paralysis of traffic in the Strait of Hormuz and a production halt at a major Saudi refinery highlighted threats to oil supply. On Monday, US West Texas Intermediate (WTI) crude rose over 6%, while European natural gas prices surged due to the closure of the world's largest LNG export plant in Qatar.

Concerns that rising energy costs will fuel inflation and limit the Federal Reserve's monetary easing pressured the bond market. The 10-year US Treasury yield rose 10 basis points to 4.03%. Traders have fully priced in a first rate cut in September, while expectations for a third cut in 2026 have largely evaporated. The Dollar rose 0.7%.

Morgan Stanley strategist Mike Wilson believes that unless there is a sharp and sustained spike in oil prices, the Middle East conflict is unlikely to alter their bullish outlook on US equities.

Bitcoin Touches $70K, ETFs See Net Inflows Last Week

Bitcoin rallied to $70,096 last night, lifting the entire crypto sector, after BTC had fallen to approximately $63K over the weekend. Increased ETF inflows and buying support provided fundamental backing, with the Fear & Greed Index ticking up to 15.

Last week, US-listed spot Bitcoin ETFs recorded approximately $800 million in net inflows, although year-to-date figures show a net outflow of $1.5 billion. Ethereum ETFs saw net inflows of around $100 million.

Crypto-related stocks closed higher on the day. MicroStrategy (MSTR) rose 6.3%, and Circle (CRCL) gained 15.2%.

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