Brent crude oil jumped around two per cent yesterday and the dollar strengthened amid conflicting reports from Iran and the US about American warships in the Strait of Hormuz.
US stocks were mixed, with the Dow Jones Industrial Average down 0.5pc, the S&P 500 0.05pc lower, and the Nasdaq Composite up 0.12pc.
Iran’s navy prevented “American-Zionist” warships entering the Strait of Hormuz yesterday, state TV reported, while the Fars news agency said two missiles had hit a US warship near Jask on the Gulf of Oman after it ignored Iranian warnings.
Reuters could not independently verify the reports. The US military said two US Navy guided-missile destroyers had entered the Gulf to break an Iranian blockade and that two US ships had transited the Strait of Hormuz.
Iran’s military had earlier yesterday warned US forces not to enter the Strait of Hormuz after President Donald Trump said the US would start helping to free ships stranded in the Gulf by the US-Israeli war on Iran. He provided few details of the plan.
US crude was last up 0.1pc to $102.03 a barrel and Brent rose to $110.36 per barrel, up 2pc on the day.
Analysts said, however, high prices were not sustainable longer term because of their impact on demand and the economy.
“The market is being pulled in two opposing directions right now: on one hand, geopolitical risk is pushing oil higher and reviving inflation fears, but on the other, underlying growth especially in the US, is clearly softening,” said Bruno Schneller, managing partner at Erlen Capital Management, a multi-family office.
This combination was driving some of the big market swings recorded in stocks, bonds and currencies, he added.
MSCI’s broadest index of global shares outside Japan rose, led by gains in Asian stocks with the tech-heavy South Korean stocks closing over 5pc higher. Hong Kong’s Hang Seng index gained 1.2pc.
In Europe, the performance of German carmakers weakened the region’s start to the week after Trump said on Friday that Washington would raise tariffs on European cars and trucks.
The pan-European STOXX 600 index was last down 0.6pc. Germany’s 10-year bond yield, the benchmark for the euro zone bloc, was last up 2 basis points at 3.052pc. Bond yields move inversely to prices. Markets in London were closed for a public holiday.
As another earnings-heavy week began, concerns remained about the scale of artificial intelligence capex investment, now at $751 billion for 2026, $80bn above estimates at the start of the earnings season and 83pc above 2025 spending.
Companies reporting this week include Advanced Micro Devices , Super Micro Computer, Palantir, Walt Disney and McDonald’s.
“Judging by last week, the market’s recipe for near-term upside will be sidestepping negative surprises out of the Middle East to allow what has been a stronger-than-average earnings season to continue to dominate sentiment,” Chris Larkin, managing director for trading and investing at E*TRADE from Morgan Stanley, said yesterday.
The threat of oil-driven inflation also lifted bond yields in a challenge to equity valuations, while several major central banks have turned hawkish on policy.
Market participants no longer expect the US Federal Reserve to lower rates this year and have priced in interest-rate hikes from the European Central Bank and Bank of England .
Barclays yesterday joined the brokerages betting the Fed will not ease rates this year.
Data this week, including Friday’s April payrolls report, could shift the Fed outlook.
The yield on benchmark US 10-year notes rose 3.6 basis points to 4.414pc, from 4.378pc late on Friday.
In forex markets, traders remained on edge over potential Japanese intervention to boost the yen.
The yen jumped in Asian trading, with the dollar falling sharply before paring some of the losses. Traders are on alert after some market players believe Tokyo stepped into the market last week.
The dollar was last broadly flat against the yen at 156.98, having fallen to as low as 155.7 yen earlier, as traders smarted from possible intervention that analysts thought could have amounted to around $35bn.
“But fundamentals remain in favour of USD/JPY, meaning USD/JPY will sooner or later recover and force the MoF’s (finance ministry) hand again,” said Carol Kong, a currency strategist at the Commonwealth Bank of Australia, who added that given the size of yesterday’s moves, she doubted Japan had interfered.
The euro fell 0.04pc to $1.17, while sterling inched lower to $1.356. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.11pc.
In commodity markets, gold fell more than 1pc to $4,565 an ounce.
l Bahrain All Share Index has closed at 1,974.29 points, marking an increase of 2.24 points above the previous closing.
This increase was due to a rise in the financials sector and the industrials sector.
Bahrain lslamic Index has closed at 968.21 points, marking an increase of 1.09 points above the previous closing.
Results indicated that 314 equity transactions took place with a volume of 8,485,173 worth BD 2,092,410.
Investors traded mainly in the financials sector, representing 88.98pc of the total value of securities traded.
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