Oil futures jumped significantly following an escalation of conflict between the United States and Iran, which involved missile and drone attacks over the weekend. Tehran stated it closed the Strait of Hormuz, a critical waterway for oil and gas shipping, while President Donald Trump responded by reinstating a blockade on Iranian shipping and demanding a fee for keeping the strait open. U.S. crude settled up 9.4% to $78.14 a barrel, and Brent crude rose 9.6% to $83.30 per barrel, driven by fears of supply disruption and inflation.
The renewed hostilities and the resulting surge in oil prices caused U.S. Treasury yields to rise, reflecting concerns about inflation and its potential impact on Federal Reserve monetary policy. The yield on the benchmark U.S. 10-year note increased by 5.06 basis points to 4.62%, while the 30-year bond yield rose 3.31 basis points to 5.104%. The two-year note's yield, sensitive to Federal Reserve interest-rate expectations, climbed 6.71 basis points to 4.275%, reaching its highest point since February 2025.
Global stock markets declined, with MSCI's gauge of stocks falling 0.9% to 1,116.28. On Wall Street, the Dow Jones Industrial Average dropped 0.3% to 52,498.64, the S&P 500 fell 0.8% to 7,515.34, and the Nasdaq Composite ended down 1.6% at 25,873.18. Technology shares, particularly those related to artificial intelligence and semiconductors, were hit hardest, partly due to profit-taking. U.S.-listed shares of SK Hynix, a chipmaker, dropped 9% after a strong Nasdaq debut, and other major AI-related stocks like Nvidia also saw declines.
Precious metals also experienced a downturn, with spot gold falling 3% to $3,998.52 an ounce and spot silver decreasing 3.8% to $57.56 an ounce. This decline was attributed to investor worries about higher-for-longer U.S. interest rates, which tend to make non-yielding assets less attractive. The U.S. dollar index, which measures the greenback against a basket of currencies, rose 0.26% to 101.32, with the euro down 0.32% against the dollar.
