Stocks and bonds fell as oil surged anew, with President Donald Trump dashing optimism that the war in the Middle East is nearing a swift resolution and that disruptions to energy flows will ease.
Nasdaq 100 contracts slumped 2.1% amid a premarket selloff in big tech stocks and chipmakers. S&P 500 futures dropped 1.7%. West Texas Intermediate jumped 10% to more than $110 a barrel after Trump used a prime-time address to pledge more aggressive action against Iran and offered no concrete plans to reopen the Strait of Hormuz. European diesel futures hit $200 a barrel.
Bonds tumbled as expectations that oil prices will stay higher for longer prompted traders to initiate fresh bets on tighter monetary policy. The dollar advance the most in a week while gold snapped a four-day streak of gains.
“This market just isn’t manageable,” said Laurent Lamagnere, deputy chief executive officer at Alphavalue in Paris. “We’re really concerned about second-round effects, not only on oil prices but also on oil supply, for example, airlines trimming destinations with harsh consequences for tourism.”
Optimism had been building for days that Trump was seeking a quick off-ramp to the war. Instead, his Wednesday speech offered no clear timeline or breakthroughs on ending the conflict, which has already roiled financial markets and pushed some equity gauges into correction territory.
Oil “has rarely dipped below $100 per barrel since its initial surge,” said Russ Mould, investment director at AJ Bell. “This may be a better indicator of where we are than the latest movements in global indices, as the world is forced to confront a situation where around 20% of the world’s supply is disrupted.”
Shares in oil and gas companies such as Venture Global Inc. and Exxon Mobil Corp. rebounded in US premarket trading. Travel and mining and semiconductor stocks fell. Nvidia Corp. slumped 3%.
Treasury yields rose across the curve, with the two-year rate up three basis points to 3.83% as traders cut the odds of a 2026 Federal Reserve rate cut to about 10% from more than 20%. Money markets again fully price in two quarter-point hikes by the Bank of England and three by the European Central Bank for the year.
Damage caused by the war will continue to have a negative impact on the global economy even if hostilities end soon, ECB Governing Council member Fabio Panetta said.
Traders are likely to trim their stock holdings ahead of the long weekend, with many markets closed for as long as four days. Since the conflict began, the S&P 500 has posted cumulative gains over the first three days of the week but cratered 9%, all told, on Thursdays and Fridays.
For Mabrouk Chetouane, global head of market strategies at Natixis IM Solutions, there is little sense in buying protection or hedging positions ahead of the break as events could go either way.
“The outcome is completely binary, it’s 50/50 between escalation and de-escalation,” Chetouane said. “The best choice is just to keep a cool head and maintain our allocation, it’s the most reasonable thing to do.”
Corporate News:
- Estée Lauder Cos. and Spain’s Puig Brands SA are advancing in negotiations to combine, people familiar with the matter said.
- One of Europe’s biggest airline groups kicked off the race for TAP SA, with Air France-KLM submitting the first known bid for a stake in the Portuguese flag carrier.
- Alibaba Group Holding Ltd. has released its third proprietary AI model in as many days, reinforcing the company’s intent to focus on profiting off its flagship artificial intelligence services.
- Stellantis NV is discussing options for building electric vehicles in Canada with its Chinese partner, Zhejiang Leapmotor Technology Co., according to people familiar with the matter.
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 1.7% as of 8:15 a.m. New York time
- Nasdaq 100 futures fell 2.1%
- Futures on the Dow Jones Industrial Average fell 1.5%
- The Stoxx Europe 600 fell 1.6%
- The MSCI World Index fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.5% to $1.1526
- The British pound fell 0.7% to $1.3210
- The Japanese yen fell 0.5% to 159.63 per dollar
Cryptocurrencies
- Bitcoin fell 2.9% to $66,165.43
- Ether fell 5.3% to $2,029.17
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.35%
- Germany’s 10-year yield advanced six basis points to 3.04%
- Britain’s 10-year yield advanced nine basis points to 4.92%
Commodities
- West Texas Intermediate crude rose 10% to $110.34 a barrel
- Spot gold fell 3% to $4,614.05 an ounce
