Global markets took another hit while oil, gold, and defense stocks surged in response to the tensions in the Middle East following the U.S. killing of Iran's top general.

The S&P 500 Index (SPY  ) fell 0.7% and financial markets around the world dropped on fears of violence in the Middle East. In London, the FSTE 100 lost 0.8% while Germany's DAX dropped 1.2%. In Asia, Japan's Nikkei 225 slipped 1.9% and Hong Kong's Hang Seng lost 0.8%.

The death of Qassem Soleimani in a drone strike has heightened the geopolitical risks for the financial markets. The U.S. bond yields fell to their lowest in three weeks as market participants try to calculate the possibility of retribution from Iran.

Gold rose 1.5% as investors dumped riskier assets and equities for the precious metal. Gold continues its rally after its enormous run in 2019 as analysts remain constructive of the current heightened political concerns.

Japan's yen, another safe asset in times of uncertainty, has risen to a three-month high against the dollar and the Swiss franc surged to a four-month high versus the U.S.currency.

In oil markets, a barrel of benchmark New York crude (USO  ) was up 0.9% at $63.60, while the Brent (BNO  ) standard rose 1.1% to $69.37. It remains to be seen how Iran will respond, but the widespread concern that whatever action is taken might affect the oil supplies and push prices higher.

Defense stocks grew in the aftermath of the U.S. airstrike. Lockheed Martin (LMT  ) moved up to 4.3%. Bomber maker Northrop Grumman (NOC  ) stock is up 5.4%. General Dynamics (GD  ) shares have risen by 0.8%. Stock in a smaller defense player, Kratos Defense & Security Solutions (KTOS  ), is up almost 10%.

"Middle East tension could change the 2020 defense conversation," potentially lifting a "sentiment overhang" for equities, analyst Jonathan Raviv wrote in a note. "As is always the unfortunate case, defense stocks tend to benefit from perceptions of heightened risk and the potential for geopolitical conflict," he said.