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Dollar rises, European stocks and bonds fall after reports of U.S. warship being hit missiles 
Finance

Dollar rises, European stocks and bonds fall after reports of U.S. warship being hit missiles 

Published by Global Banking & Finance Review

Posted on May 4, 2026

1 min read

· Last updated: May 4, 2026

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Finance Markets currencies Geopolitics

Dollar Strengthens as European Markets Drop After U.S. Warship Incident

Market Reactions to U.S. Warship Incident in the Strait of Hormuz

Incident Overview

LONDON, May 4 (Reuters) - The dollar strengthened while European shares and bond prices fell on Monday after Iran's Fars News agency reported that two missiles hit a U.S. warship when it tried to pass through the Strait of Hormuz. 

Currency Movements

Dollar Index Performance

The dollar index, which measures the currency against six peers, rose 0.3% to 98.542. 

European Markets Response

Stock Market Declines

The pan-European STOXX 600 index was last down 0.9%, while the blue-chip Euro STOXX 50 was 1.7% lower.

Bond Market Movements

German Bond Yields

Germany's 10-year bond yield, the benchmark for the euro zone bloc, was last up 5 basis points at 3.082%. Bond yields move inversely with prices. 

(Reporting by Samuel Indyk; Editing by Dhara Ranasinghe)

Key Takeaways

  • Geopolitical tensions escalated as Iran reported missile strikes on a U.S. warship transiting the Strait of Hormuz, stoking risk aversion.
  • The dollar strengthened—DXY up 0.3% to 98.542—on safe‑haven demand amid the heightened Middle East tensions.
  • European markets tumbled: STOXX 600 down ~0.9%, Euro STOXX 50 off ~1.7%, and Germany’s 10‑year yield rose 5 bps to 3.082%, reflecting falling bond prices.

Frequently Asked Questions

Why did the dollar rise on Monday?
The dollar rose following reports that a U.S. warship was hit by missiles in the Strait of Hormuz, increasing demand for safe-haven assets.
How did European stocks react to the U.S. warship incident?
European stocks, including the STOXX 600 and Euro STOXX 50, fell sharply after news of the incident.
What happened to European bond yields after the report?
Germany's 10-year bond yield rose by 5 basis points, reflecting a drop in bond prices after the incident.
Where did the U.S. warship incident occur?
The incident reportedly occurred as the U.S. warship was passing through the Strait of Hormuz.
Which news agency reported the U.S. warship being hit?
Iran's Fars News agency was the source reporting that two missiles hit the U.S. warship.

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