Stocks fell, bond yields spiked, and oil rallied after President Donald Trump declared the ceasefire between the US and Iran to be over. S&P 500 futures slid 1%, Brent crude advanced 6.3% towards $79 a barrel, and the Stoxx Europe 600 fell 1.8%. Trump's declaration came after the US launched strikes against Iran and revoked a waiver that allowed the sale of Iranian oil, in response to recent attacks on ships in the Strait of Hormuz. Violeta Todorova, Senior Research Analyst at Leverage Shares, noted that markets had been complacent about the durability of the June memorandum of understanding.
Brent crude rose 6.2% to $78.79 a barrel, while spot gold fell 1.4% to $4,050.59 an ounce. The yield on 10-year gilts jumped 10 basis points to 4.95%, the highest in nearly a month, and two-year Treasuries rose three basis points to 4.22%. The dollar edged 0.1% higher. Michael Field, Chief Equity Strategist at Morningstar, commented that "overlapping negative news flow is pushing markets down now, and with no major earnings coming out in the next few days to change that trend, it seems there will be little respite for markets."
Despite the significant oil price increase, Skylar Montgomery Koning, a macro strategist, suggested that it takes a much larger move in oil to overwhelm other drivers of equity performance, and without a much larger increase in commodity prices, the escalation is unlikely to have a material impact on equity markets. The MSCI Asia Pacific Index fell 1%, and the MSCI Emerging Markets Index fell 0.8%. Bitcoin fell 2.7% to $61,922.8, and Ether fell 2.9% to $1,731.74.
In related news, Alibaba Group Holding Ltd. jumped 12% in Hong Kong. The tech sector has seen volatility, with the year's best-performing major benchmark extended losses to 20% since last month's high, as investors shifted out of semiconductors in search of more attractive tech valuations.
