US President Donald Trump's warning that he may significantly escalate the war in Iran is casting a long shadow over global financial markets. This potential escalation threatens to worsen an already severe energy-price shock, which is already disrupting the worldwide economic outlook. Stock, bond, and oil markets are reacting nervously ahead of the trading week, with investors bracing for possible volatility.

The core concern is how heightened tensions in the Middle East could disrupt oil supplies, driving prices higher and impacting corporate earnings and consumer spending globally.