Oil surged while stocks and bonds fell after President Donald Trump ordered a blockade of the Strait of Hormuz, heightening tensions with Iran following the collapse of weekend peace talks.
Brent crude jumped 7.4% to just above $102 a barrel on concern a blockade will disrupt energy flows through the key waterway.
Asian shares dropped 1.1%, while S&P 500 Index futures fell 0.7% as higher oil prices threatened to weigh on economic growth. Tech companies such as Taiwan’s MediaTek Inc. showed resilience, supported by robust sales.
European shares were primed to drop 1.4% at the open. The dollar, which has been the haven of choice since the Middle East conflict began, strengthened against all its Group-of-10 peers. Treasuries fell and Japan’s 10-year yield rose to 2.49%, the highest since 1997 on concern higher energy prices will push up inflation.
Trump’s threats of escalation dented sentiment after global stocks posted their biggest weekly gain in more than two years, and Brent had its steepest weekly drop since 2022.
Even so, Monday’s relatively modest pullback after the failure of talks suggests investors retain some guarded optimism that a resolution can still be reached and limit the broader impact of the conflict.
