Oil Surge and Higher Yields Pressure Global Stocks – Europe Market Wrap
Stocks declined while oil prices and bond yields moved higher after renewed attacks in the Middle East deepened doubts that the war is close to ending.
S&P 500 futures fell 0.3%, while Nasdaq 100 contracts lost 0.5% as chipmakers broadly retreated in early trading. Brent crude climbed 2.6% toward $97 a barrel after the US launched airstrikes on an Iranian military facility. Bonds weakened across most major markets as traders awaited inflation data expected to show the Federal Reserve’s preferred price gauge moving closer to 4%.
The latest escalation between the US and Iran highlighted the fragility of the ceasefire, even though many investors still believe a lasting agreement is ultimately likely. Concerns are also growing that higher energy prices could reignite inflation, leading central bankers to warn that interest rates may need to remain elevated or rise further.
Europe’s Stoxx 600 fell 0.7%, although technology shares held up better than the broader market despite weakness in Nasdaq 100 futures. A regional Asian stock gauge ended its longest winning streak since February. The dollar strengthened for a third consecutive session, while Bitcoin dropped to its lowest level in more than six weeks.
Less than a day after Federal Reserve Governor Lisa Cook warned that inflation was moving in the wrong direction, Minneapolis Fed President Neel Kashkari told CNBC that consumer prices remained “much too high.”
Fed Vice Chair Philip Jefferson also said inflation risks were still tilted to the upside, even though he expects the effects of tariffs and higher energy costs to fade over time. European Central Bank Chief Economist Philip Lane warned that the economic consequences of the war could continue affecting policymakers even after the conflict ends.
Data due Thursday is expected to show that the US personal consumption expenditures price index rose 3.8% in April from a year earlier. That would place inflation a full percentage point above February’s level, marking the sharpest two-month acceleration since 2021.
