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Markets are bracing for fallout after the U.S. launched airstrikes on Iranian nuclear sites Saturday night. Investors are watching closely for Iran’s response, particularly any threat to the Strait of Hormuz, a critical chokepoint for global oil shipments. On Sunday, Iran’s parliament endorsed a measure supporting closure of the strait, which handles nearly 20% of the world’s oil and gas flows. While the final decision rests with Iran’s Supreme National Security Council, the move raises the stakes considerably.

So far, market reaction to Israel/Iran tensions has been relatively muted. The S&P 500 remains just 3% off recent highs, and many investors believed the conflict will stay localized. But the risk calculus is shifting with US involvement. Oil and defense stocks are expected to rally, the dollar could strengthen, and equities may see pressure as safe-haven flows pick up. Until Iran’s next move becomes clear, markets are trading on edge, with geopolitical risk back in the driver’s seat.