Bonds and Stocks Fall as Traders Are Rattled by the Oil Surge – Europe Market Wrap

Stocks sank and bonds extended losses as the war in Iran reached its fourth day with no signs of abating, raising concerns of a prolonged interruption to oil markets and an increase in inflation.

S&P 500 futures fell 1.7%. European and Asian share indices are set for their worst two-day decline since April. Brent crude climbed more than 8%, surpassing $85 a barrel for the first time since July 2024. European gas gained 41% on Monday, as Qatar’s largest LNG export plant remained closed.

The yield on two-year UK gilts rose 17 bps. A surprising acceleration in Eurozone inflation boosted betting that the ECB will hike interest rates in 2026. Ten-year Treasury rates rose 6 bps to 4.10%, as prospects for a second Fed cut in 2026 faded. The Dollar continued to be the preferred safe haven, climbing 0.7%.

The Strait of Hormuz, a tiny channel off the coast of Iran that transports roughly one-fifth of global oil supplies, is a major concern for merchants.

Nvidia slumped 3% in US premarket trade as officials discuss limiting the amount of artificial-intelligence accelerators the company may ship to a single Chinese customer. In Europe, banks and insurers are now in negative territory for the year as bond yields rise, weighing on valuations. UniCredit and Deutsche Bank fell more than 5%.