Oil prices experienced a significant surge following a weekend of renewed conflict between the United States and Iran, focusing on the critical Strait of Hormuz. US crude (WTI) settled up $6.73, or 9.4%, at $78.14 a barrel, while Brent crude rose $7.29, or 9.6%, to $83.30 per barrel. This escalation in tensions, with both countries claiming control over the strait and President Donald Trump reinstating blockades and proposing a 20% fee on cargo, has disrupted oil and gas shipping, driving up global fuel prices and fanning concerns about inflation.
Global stock markets declined, with MSCI's gauge falling 0.9% to 1,116.28 points. On Wall Street, the Dow Jones Industrial Average dropped 138.37 points (0.3%) to 52,498.64, the S&P 500 fell 60.05 points (0.8%) to 7,515.34, and the Nasdaq Composite sank 408.43 points (1.6%) to 25,873.18. Technology shares were particularly hit, with investors selling off artificial intelligence-related stocks and semiconductors. U.S.-listed shares of SK Hynix, a key chipmaker, plummeted 9% after its Nasdaq debut on Friday, and other chip stocks like Micron Technology fell 4.4%. Nvidia, the largest stock by value on Wall Street, declined 3.5%.
Bond yields rose concurrently with oil prices and geopolitical tensions, reflecting worries about increased inflation and its potential impact on Federal Reserve monetary policy. The yield on the benchmark U.S. 10-year note climbed 5.06 basis points to 4.62% from 4.569% on Friday. The 30-year bond yield increased 3.31 basis points to 5.104%, and the two-year note's yield rose 6.71 basis points to 4.275%, reaching its highest point since February 2025. Precious metals like spot gold and silver also fell, with gold down 3% to $3,998.52 an ounce and silver down 3.8% to $57.56 an ounce, largely due to concerns about prolonged higher U.S. interest rates.
International markets also felt the impact, with South Korea's KOSPI index closing down nearly 9%, primarily due to significant drops in chip companies like SK Hynix, which fell 15.4% in Seoul. This makes the KOSPI a crucial barometer for the global chip sector's sentiment. Shanghai stocks declined 2.1%, and Japan's Nikkei 225 dropped 1.9%. The U.S. dollar index, measuring the greenback against a basket of currencies, rose 0.26% to 101.32, while the euro decreased 0.32% to $1.1377. The renewed hostilities and their economic ramifications are now the central focus for investors, with upcoming earnings reports from major banks expected to offer further insights into the economic outlook.
