Global stock markets made gains on Monday as investors were focused on developments in the Middle East conflict at the start of a week packed with earnings and economic data.
The Japanese yen suddenly jumped in Asian trading, with the dollar falling sharply before paring some of the losses. Traders are on alert for intervention after Tokyo stepped into the market to shore up the currency last week.
Iran’s military warned US forces on Monday not to enter the Strait of Hormuz after US President Donald Trump said the US would start helping to free ships stranded in the Gulf by the US-Israeli war on Iran.
Trump provided few details of the plan to aid ships, while the US Central Command said it would support the effort with 15,000 military personnel, more than 100 land- and sea-based aircraft, along with warships and drones. A report from Axios later claimed the US Navy would not necessarily escort ships through the strait.
Against this backdrop, Brent crude futures surged over $2.50 to $110.73 (€94.54) per barrel, having recovered from an initial decline during Asian trading hours, while US crude also climbed more than 2 per cent to $104.18.
Dealers noted a bulk carrier had reported being attacked by multiple small craft while transiting past Sirik in Iran on Sunday, though it was not clear how many ships would try to run through the Strait of Hormuz even with Navy protection.
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“The market is being pulled in two opposing directions right now: on one hand, geopolitical risk is pushing oil higher and reviving inflation fears, but on the other, underlying growth especially in the US, is clearly softening,” said Bruno Schneller, managing partner at Erlen Capital Management, a multifamily office.
This combination was driving some of the big market swings recorded in stocks, bonds and currencies, he added.
MSCI’s broadest index of global shares outside Japan rose, led by tech-heavy South Korean stocks which returned from a holiday with a jump of over 5 per cent. Hong Kong’s Hang Seng index gained 1.2 per cent.
In Europe, German carmakers dampened the region’s start to the week after Trump said on Friday that Washington would raise tariffs on European cars and trucks.
The pan-European STOXX 600 declined by 0.3 Per cent to 609.64 points after posting a modest gain last week. Most regional bourses were muted while Germany’s DAX rose 0.2 per cent.
Trading in Europe was subdued; markets in London were closed for a public holiday.
The euro was steady at around $1.17, while sterling inched lower to $1.3560.
In commodity markets, gold ticked lower to $4,578 an ounce . – Reuters
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