As US-Iran Truce is Under Pressure, Stocks Decline – Europe Market Wrap
Stocks declined, bond yields surged and oil prices jumped after Trump reignited geopolitical tensions by declaring the ceasefire between the US and Iran to be over, renewing concerns over energy supplies and the broader macro outlook.
S&P 500 futures fell 0.8%, while Brent crude rallied 5% to around $78/bbl after Trump dismissed the ceasefire as “a waste of time” following US strikes on Iran in response to attacks on ships transiting the Strait of Hormuz. Gold declined while the Dollar traded mixed.
European government bonds sold off sharply as traders increased bets that central banks will be forced to tighten policy further in response to rising energy prices and inflation risks. The UK 10Y gilt yield jumped 10 bps to 4.95%, its highest level in nearly a month, while Treasuries extended Tuesday’s selloff with more modest increases in yields.
The renewed escalation triggered a broader risk-off move after months of easing geopolitical tensions had supported sentiment. Since late March, equities had been buoyed by a strong earnings season and optimism surrounding AI, but investors are now reassessing those gains against rising geopolitical uncertainty.
Energy shares outperformed in US premarket trading as higher oil prices boosted the sector. Semiconductor stocks remained under pressure, with Micron and Sandisk both falling more than 4%, while all members of the Magnificent Seven traded lower, led by declines in Meta.
