Stocks fell this morning after rallying to record highs, as surging oil prices revived inflation concerns. Asian equities fell 2.5%, with South Korea’s Kospi down 6.7% after being one of the standout beneficiaries of the AI trade this year. US futures also weakened, with Nasdaq 100 contracts down 1.2%, while European futures pointed to a sharp fall at the open. Gold and silver also sold off after their recent surges, with gold falling below $4,600 and silver below $79. Markets remain focused on the Trump–Xi summit, where signs of cooperation emerged, though there appeared to be limited progress on Iran.
The pressure was driven by Brent crude rising back toward $108 after President Trump gave mixed signals on whether the US wants the Strait of Hormuz reopened. Higher energy prices have now fed into a broader repricing in rates, with investors fully pricing out Fed cuts this year and beginning to assign some probability to a hike. The US two-year yield rose to its highest level in 14 months, while the 10-year yield climbed to 4.53%, adding pressure to equity valuations.
UK politics continues to weigh heavily on GBP, which has been the worst-performing G7 currency over the last week. Following Wes Streeting’s resignation from the Cabinet yesterday, a path for Andy Burnham to challenge Starmer’s leadership is reportedly being mapped out, although he would likely have to fend off Reform in the process. Keir Starmer continues to project stability as UK 10-year yields hover around 5%.
• S&P 500 futures −0.7%
• Nasdaq 100 futures −1.2%
• US 10-year yield +5 bps to 4.53%
• Bitcoin −1.2% to $80,414
• Gold −1.8% to $4,570
• WTI +2.5% to $103.65
