Stocks and government bonds fell as fresh US strikes on Iran pushed up oil prices and fueled bets on Federal Reserve interest-rate hikes.
MSCI’s gauge of Asia Pacific shares fell 1.8%, with South Korea’s Kospi sliding 8%. Tech remained in focus, with SK Hynix Inc. shares plunging 13% in Seoul after its US-listed American depositary receipts surged 13% in their trading debut on Friday. Futures contracts for the Nasdaq 100 Index retreated 1.3%, while European shares were set to drop 1% at the open. Brent crude jumped 4.3% to $79.25 a barrel as conflicting claims over the status of the Strait of Hormuz fueled speculation about potential supply disruptions. Treasuries dropped across the curve with the yield on the rate-sensitive two-year note climbing to the highest level since February 2025. The dollar, the haven of choice during the Middle East conflict, strengthened against all of its Group-of-10 peers, as higher oil prices fueled speculation that the Fed will raise rates to cool inflationary pressure. That made non-yielding precious metals less appealing, sending gold and silver lower. As traders revived the Middle East playbook amid the prospect that higher oil prices will rekindle inflation and keep monetary policy tighter for longer, investors are entering a pivotal week. The start of earnings season will test whether companies can deliver the profit growth needed to support the AI-fueled rally, while US inflation data and Fed Chair Kevin Warsh’s congressional testimony will offer fresh clues on the outlook for interest rates. Still, the earnings season will be “solid,” led by tech companies and a reasonably good economy, she said. In other corners of the market, precious metals declined, with gold losing 1.6% to about $4,055 an ounce, while silver dropped almost 3% to about $58.20 an ounce. Government bonds in Japan and Australia retreated. The yield on the two-year US Treasury note climbed two basis points to 4.23%. The Bloomberg gauge of the dollar rose 0.1%. As sentiment weakened across markets, Bitcoin fell more than 2% to around $62,700, leading a broader selloff in cryptocurrencies. The US military launched strikes on Iran Sunday aimed at further weakening the country’s ability to attack civilian vessels transiting the Strait of Hormuz, the US Central Command said. The latest action followed Iranian drone and missile attacks on US allies including Kuwait, Jordan and Qatar. The US military has since concluded the strikes. Iran’s Islamic Revolutionary Guard Corps set fire to several large missile depots and fuel storage tanks at Prince Hassan Air Base in Jordan, using missiles and drones, Iran’s state-run Islamic Republic News Agency said in an X post. Confusion over the status of the Strait of Hormuz added to the uncertainty, with Iran saying it had closed the waterway, while the US military and maritime authorities said shipping continued through its southern route. Investors will also closely gauge this week’s US inflation data, after the gain in oil revived concern that higher energy costs may further complicate the disinflation story. Swaps are pricing almost 40 basis points of Fed rate hikes by December, up from about 15 basis points in early June. Fed Chair Warsh will also make his first congressional appearance since taking the helm after pledging to scale back forward guidance on the rate outlook. Earlier this month in Sintra, Portugal, Warsh said price risks have come down in recent weeks and repeated his determination to bring inflation back to the US central bank’s 2% target. Warsh is less likely to be a major driver for Treasuries “unless he breaks with the tone he’s established across the first meeting and the comments in Sintra,” said Kenneth Crompton, head of rates strategy at National Australia Bank Ltd. in Sydney. “Markets are slightly more sensitive to the Iran headlines at the moment.”
Nikkei -2.36% Hang Seng -0.11% CSI -1.34% Kospi -7.63% Shanghai -1.54% Shenzen -2.94%
Eur$ 1.1410 CNH 6.7879 CNY 6.7847 JPY 162 GBP 1.3380 CHF 0.8096 RUB 78.8066 TRY 47 WTI$ 74.53 +4.37% Gold 4,061 -1.38% BTC 62,655 -2.34% ETH 1,780-2.25%
S&P -0.58% Nasdaq -1.39% EuroStoxx -0.95% FTSE -0.34% Dax -1.03% SMI -0.37%
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