Stocks Retreat as Fresh Middle East Strikes Lift Oil – Asia Market Wrap
Stocks and bonds declined while oil prices climbed after renewed attacks in the Middle East weakened optimism for a deal to end the conflict. The dollar strengthened.
The MSCI All Country World Index, the broadest measure of global equities, pulled back 0.4% from a record high. An index of Asian stocks fell 2%, ending a five-day rally fueled by hopes for a peace agreement and continued strength in technology shares. Futures signaled the weakness would likely extend to US and European markets.
Brent crude rose nearly 3.7% to around $98 a barrel after US forces launched airstrikes on an Iranian military facility and imposed fresh sanctions aimed at preventing Tehran from profiting from ships passing through the Strait of Hormuz. US officials described the strikes as defensive, while Iran said it had targeted an American airbase.
As sentiment deteriorated, the dollar — the preferred haven during the Middle East conflict — advanced. Treasuries declined as higher oil prices fueled inflation concerns, pushing the 10-year Treasury yield up four basis points to 4.53%. Gold dropped 1.9% to $4,370 an ounce, while Bitcoin slid to a six-week low.
Earlier, President Donald Trump said he was “not satisfied” with negotiations involving Iran, reducing expectations for a near-term breakthrough. Trump also stated that no single country would control the Strait of Hormuz, underscoring one of the key disputes prolonging the conflict as it moved into its fourth month.
Federal Reserve Vice Chair Philip Jefferson said he expects inflation to ease later this year as the impact of tariffs and higher energy costs fades, though he warned risks remain tilted to the upside. Separately, Fed Governor Lisa Cook said inflation is moving in the wrong direction and indicated she would support higher interest rates if that trend continues.
