Oil prices jumped nearly 2% on Monday and global stock markets displayed mixed results following conflicting reports from Iran and the United States over a naval incident in the strategic Strait of Hormuz. Iran’s state television claimed that its navy prevented American warships from entering the waterway, while Fars news agency reported that two missiles struck a U.S. vessel near Jask on the Gulf of Oman after it ignored warnings. The U.S. military denied these claims, stating that two guided-missile destroyers had transited the strait without incident.
Brent crude rose to $110.36 per barrel, up 2%, while U.S. crude edged up 0.1% to $102.03. Analysts warned that the rally may be short-lived due to underlying demand concerns. “The market is being pulled in two opposing directions,” said Bruno Schneller, managing partner at Erlen Capital Management. “Geopolitical risk is pushing oil higher and reviving inflation fears, but underlying growth, especially in the U.S., is clearly softening.” This tension is driving volatility across asset classes.
Equities showed a mixed picture: the Dow Jones Industrial Average fell 0.5%, the S&P 500 slipped 0.05%, while the Nasdaq Composite gained 0.12%. In Asia, South Korea’s KOSPI surged over 5% amid tech sector gains, and Hong Kong’s Hang Seng rose 1.2%. European markets declined, with the STOXX 600 down 0.6%, pressured by German automakers after President Donald Trump threatened higher tariffs on European car imports.
Investors are closely watching central bank policy amid rising inflation risks. The Federal Reserve is now not expected to cut rates this year, and the European Central Bank and Bank of England are seen as likely to hike. Barclays joined other brokerages in predicting the Fed will hold rates steady. The yield on the benchmark 10-year U.S. Treasury note rose to 4.414%, reflecting these expectations. Key data this week, including the April payrolls report, could further shape the outlook.
Earnings season continues with report from Advanced Micro Devices, Super Micro Computer, Palantir, Walt Disney, and McDonald’s. “The market’s near-term upside will depend on sidestepping negative Middle East surprises to let earnings dominate sentiment,” said Chris Larkin of E*TRADE from Morgan Stanley.
For more context, read about the Strait of Hormuz and its global importance, the latest Middle East tensions from Reuters, and Iran-US naval incidents from BBC.
Source: ARY News