Equities and bonds came under pressure after oil surged following the US ordering a blockade of the Strait of Hormuz, escalating tensions with Iran after the collapse of ceasefire talks. US futures fell and European markets are set for a weaker open, while Asian equities declined. Crude jumped sharply, reinforcing concerns about a potential disruption to global energy supply through one of the world’s key shipping routes. The move higher in oil is adding to inflation worries, pushing yields higher and strengthening the dollar as markets price a more challenging backdrop for growth and policy.
Despite the escalation, the pullback in equities has been relatively contained so far, and the environment remains highly headline-driven, with conflicting signals continuing to drive volatility across asset classes. Gold slipped as rising yields weighed on demand, while crypto also edged lower. Overall, markets remain sensitive to developments in the Middle East, with oil continuing to be the key driver of cross-asset moves.
Elsewhere, Orban lost in yesterday’s election, with the pro-European opposition now taking over. This has been followed by a rally in HUF, as it is hoped this will unblock access to billions of euros of EU financing.
• S&P 500 futures −0.7%
• Nasdaq 100 futures −0.8%
• Euro Stoxx 50 futures −1.5%
• US 10-year yield +3 bps to 4.34%
• Bitcoin −0.7% to $70,832
• Gold −0.5% to $4,724
• WTI +8.1% to $104.42
