Jakarta, CNBC Indonesia  — Global stock markets are expected to experience pressure at the opening of this week following the United States military attack on Iran over the weekend.

Rising geopolitical tensions are expected to trigger a sharp sell-off, as investors watch for retaliatory risks from Iran and a spike in oil prices.

The situation in the Middle East is now the main focus of market players, overriding attention to the release of US economic data scheduled for this week.

In a nationally televised address, Trump called the strike a"spectacular military success," saying Iran's nuclear enrichment facilities had been "destroyed" and warned that the U.S. military could target other facilities if Iran refused to make peace.

In response to the attack, Iran said it kept all options open to defend itself and warned of"lasting consequences." It also reportedly stepped up its military attacks on Israel.

"It's hard to imagine the stock market not reacting negatively, the only question is how much," said Steve Sosnick, Chief Market Strategist at Interactive Brokers, Connecticut, as reported by Reuters, Sunday (6/22/2025).

He added that market reaction would depend largely on Iran's response and whether oil prices spike sharply.

Sosnick said the biggest impact would be on the knock-on effects such as oil prices, market stability and potential price increases in other economic sectors. He said no major global stocks were directly affected by the US attack.

The benchmark S&P 500 index is still below its February high, despite recovering from an early April plunge as tariff tensions eased. However, it is now stuck about 2.7% below its closing high and has not set a new record in 27 trading sessions.

The Israel-Iran conflict has driven a sharp spike in oil prices and increased market caution. However, much of the geopolitical impact has so far been felt more in the oil market than the stock market.

Stock investors remain wary of a potential spike in inflation due to high oil prices, which could derail hopes for a Federal Reserve interest rate cut that was previously expected this year.

The Fed on Wednesday kept its benchmark interest rate unchanged and signaled that borrowing costs are likely to continue to be cut this year. But it said it expected the pace of rate cuts to be slower than projected at its March meeting, amid expectations of a spike in inflation from Trump’s tariff plans.

"The question now is on oil prices and their impact on inflation - this will determine the direction of monetary policy and how long the Fed keeps interest rates restrictive," said Sonu Varghese, global macro analyst at Carson Group.

He added that this condition would encourage capital movement to safe assets such as the US dollar and government bonds.

However, some market players expect the escalation of tensions to be short-term and will not develop into a prolonged conflict. Mark Malek, CIO of Siebert Financial, said that Trump's move could be good news for the stock market.

"I think this is positive for the market because investors have been preparing for the last two weeks for uncertainty, and now there is clarity that this is not a long-term conflict," he said, noting that he sees the attack as a one-off, not the beginning of a major war.

Outside of the conflict, market players will also be watching a series of US economic data to be released this week. The data includes business activity and home sales on Monday, consumer confidence figures on Tuesday, and the PCE price index on Friday.

Previously, US consumer confidence had plunged in recent months due to fears of recession and tariff-driven inflation. But with inflation under control and a trade truce with China, investors are hoping for a recovery in sentiment.

"Remember, survey-based data crashed in March, April and May, and my hope is that this time the data will start to show improvement," Mark Hackett, chief market strategist at Nationwide, said in an interview before the US attacked Iran.