US sharemarkets fell sharply overnight as escalating conflict in the Middle East sent oil prices soaring and disappointing reactions to major technology earnings weighed on investor sentiment.
The Dow Jones Industrial Average dropped 506.93 points, or 0.97%, to 51,711.65. The S&P 500 fell 1.21% to 7,408.30, while the Nasdaq Composite slid 2.15% to 25,137.69.
Technology stocks led the decline after Alphabet and Tesla reported quarterly results. Alphabet fell 7% as investors focused on the company’s rising artificial intelligence spending, while Tesla plunged 14% following its earnings report. The results renewed concerns that elevated AI investment may take longer to generate returns.
Oil prices surged after Yemen’s Houthi militants claimed attacks on two Saudi oil tankers in the Red Sea, raising fears of a broader regional conflict. President Donald Trump also warned the US could launch further strikes on Iranian infrastructure, while reports suggested he was considering a significantly larger military operation. Brent crude rose 7% to settle above US$100 a barrel, while West Texas Intermediate gained 6% to US$92.19.
Higher energy prices fuelled concerns that inflation could remain elevated, putting further pressure on bond markets. The US 10-year Treasury yield climbed to 4.70%, while German bond yields reached their highest level in 15 years.
Australian Market Outlook
Australian shares are expected to open lower after the sharp decline on Wall Street and another jump in oil prices heightened concerns about inflation and global growth. S&P/ASX 200 futures are down 50 points, or 0.6%, to 8,750. Technology stocks are likely to remain under pressure following the sell-off in Alphabet and Tesla, although Intel rose strongly in after-hours trade after issuing a better-than-expected revenue forecast, supported by robust demand from its data centre business. European markets also weakened overnight, with the STOXX 600 falling 1.3% as investors weighed disappointing earnings, higher bond yields and rising energy prices.
