Oil surges, stocks slip and bond yields rise as Gulf conflict flares up again
Market Reactions to Renewed Gulf Tensions
By Sinéad Carew and Stefano Rebaudo
July 13 (Reuters) - Oil futures surged nearly 9% on Monday and equities fell as conflict between the United States and Iran re-ignited over the weekend, once again throttling the flow of goods through the key Strait of Hormuz.
Strait of Hormuz Blockade and Oil Price Surge
Over the weekend, Tehran had said it closed the strait, a vital global artery for oil-and-gas shipping. President Donald Trump responded Monday by saying the U.S. was reinstating its blockade of Iranian shipping in the Gulf.
Trump also promised to keep the strait open for a fee, though the U.S. has not been able to wrest control of the waterway from Iran since the outset of the war at the end of February.
The revival of the blockade jolted oil markets that had already been rallying after the two sides had exchanged missile and drone attacks over the weekend. U.S. crude settled up 9.4%, or $6.73, to $78.14 a barrel while Brent settled at $83.30 per barrel, up 9.6%, or $7.29.
Market Commentary
"The trading of bombs between the United States and Iran is front and center," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "It's more of the same uncertainty surrounding where the Middle East stands. What's going to resolve it and when is it going to be resolved?"
Stock Market Performance
MSCI's gauge of stocks across the globe fell 10.26 points, or 0.9%, to 1,116.28.
Wall Street Indices
On Wall Street, the Dow Jones Industrial Average fell 138.37 points, or 0.3%, to 52,498.64, the S&P 500 fell 60.05 points, or 0.8%, to 7,515.34 and the Nasdaq Composite ended the session down 408.43 points, or 1.6%, at 25,873.18.
Technology and Semiconductor Stocks
Technology shares were the weakest sector on Monday, as investors sold stocks related to artificial intelligence and particularly semiconductor shares. U.S.-listed shares of SK Hynix finished down 9% after rallying sharply on their Nasdaq debut on Friday.
South Korea's KOSPI KOSPI closed down nearly 9% overnight. That index has emerged as a key global barometer for chip-sector sentiment.
Earlier, the pan-European STOXX 600 index finished down 0.01%.
Bond Yields and Currency Movements
U.S. Treasury yields rose as U.S.-Iran hostilities and rallying oil prices fanned concerns about inflation pressures and their potential effect on Federal Reserve monetary policy.
U.S. Treasury Yields
The yield on the benchmark U.S. 10-year note rose 5.06 basis points to 4.62% from 4.569% late on Friday. The 30-year bond yield rose 3.31 basis points to 5.104%.
The two-year note's yield, which typically moves in step with Federal Reserve interest-rate expectations, rose 6.71 basis points to 4.275%, hitting its highest yield since February 2025.
Currency Markets
The U.S. dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.26% to 101.32, with the euro down 0.32% at $1.1377.
Against the Japanese yen, the dollar strengthened 0.48% to 162.47.
Sterling weakened 0.47% to $1.3345 at the start of a pivotal week in British politics as Andy Burnham is expected to be formally anointed as Labour leader on Friday and be officially named as UK prime minister on July 20.
Precious Metals Performance
Precious metals prices fell on worries about higher-for-longer U.S. interest rates.
Spot gold fell 3% to $3,998.52 an ounce while spot silver fell 3.8% to $57.56 an ounce.
(Reporting by Sinéad Carew, Stefano Rebaudo; Editing by Helen Popper, Chizu Nomiyama, Susan Fenton and David Gaffen)
