Global markets experienced a significant downturn on Monday as escalating tensions in the Middle East rattled investor confidence. President Trump’s ultimatum to Iran regarding the Strait of Hormuz, coupled with retaliatory threats, intensified concerns and triggered a widespread sell-off in stocks and bonds. The global benchmark Brent crude surpassed $113 per barrel, and West Texas Intermediate reached $100, raising fears of increased inflation.
Major stock indexes across Asia suffered losses, with Japan’s Nikkei falling by 3.5% and South Korea’s KOSPI shedding nearly 6%. European shares also opened lower, with the STOXX 600 dropping more than 2% to a four-month low. Simultaneously, government bond yields surged, with 10-year U.S. Treasury yields hitting a nine-month high. Market expectations now reflect a higher probability of interest rate hikes by the Federal Reserve, the European Central Bank, and the Bank of England. Reuters is a global news organisation that provides financial and business reporting. Reuters, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Gold prices also declined sharply, reflecting a reversal of last year’s speculative frenzy as investors sought to increase their cash positions. The Japanese government signaled its readiness to intervene in foreign exchange markets as the yen approached the $160 threshold. Meanwhile, the International Energy Agency is considering releasing more stockpiled oil to alleviate pressure on energy prices, stating that opening Hormuz remained the only real solution.
Looking ahead, market participants are closely monitoring developments in the Middle East and the potential impact on energy markets and inflation. The EU’s flash consumer confidence data for March is also a key event to watch. Additionally, Ursula von der Leyen, the President of the European Commission, is beginning a three-day visit to Australia.
