Oil futures experienced a significant surge on Monday, with US crude settling up 9.4% to $78.14 a barrel and Brent crude increasing by 9.6% to $83.30 per barrel. This jump was triggered by the re-escalation of conflict between the United States and Iran, specifically concerning control over the Strait of Hormuz, a crucial global artery for oil and gas shipping. Tehran had announced the closure of the strait, prompting President Donald Trump to reinstate a blockade of Iranian shipping and propose a fee for transit through the waterway to cover US protection costs.
Global stock markets reacted negatively to the renewed geopolitical tensions and rising oil prices, with MSCI's gauge of global stocks falling 0.9%. 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 declined 1.6% to 25,873.18. Technology shares, particularly those related to artificial intelligence and semiconductors, were the weakest performers, with US-listed shares of SK Hynix finishing down 9% after its Nasdaq debut. South Korea's KOSPI index also closed down nearly 9%, reflecting concerns over the chip sector.
The bond market saw US Treasury yields rise, driven by fears that surging oil prices and US-Iran hostilities would fuel inflation and influence Federal Reserve monetary policy. The yield on the two-year note rose 6.71 basis points to 4.275%, reaching its highest level since February 2025. The benchmark US 10-year note's yield increased by 5.06 basis points to 4.62%, and the 30-year bond yield rose 3.31 basis points to 5.104%. Precious metals such as gold and silver also saw declines, with spot gold falling 3% to $3,998.52 an ounce and spot silver dropping 3.8% to $57.56 an ounce, as concerns about higher-for-longer US interest rates weighed on investor sentiment.
Adding to the global market unease, the US dollar index rose 0.26%. In Asia, beyond South Korea, stocks fell 2.1% in Shanghai and Japan's Nikkei 225 dropped 1.9%. European markets, however, showed more modest movement, with the pan-European STOXX 600 index finishing down a marginal 0.01%. Analysts are closely watching upcoming profit reports from major US banks such as Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Wells Fargo, which are expected this week, with S&P 500 companies forecast to deliver 23.6% growth in the latest quarter.
