Stocks fell and oil prices rallied yesterday, while government bond yields rose, after US and Iranian forces renewed exchanges of heavy missile and drone assaults, with Tehran saying it had again closed the vital Strait of Hormuz.
Oil prices jumped more than five per cent yesterday after US President Donald Trump said the United States was reinstating a naval blockade on Iran, reigniting concerns over energy shipments through the Strait of Hormuz.
Brent crude futures were up $4.06, or 5.34pc, to $80.07, while US West Texas Intermediate crude was up $3.74, or 5.24pc, to $75.15 a barrel.
Oil gained after Trump said the US was reinstating the blockade and that the United States would be reimbursed 20pc on all cargo shipped through the Strait of Hormuz, following renewed military exchanges with Iran.
“President Trump’s reinstatement of restrictions on Iranian maritime traffic, alongside retaliatory attacks and sharply reduced vessel flows through the strait has intensified concerns over near-term supply availability,” said Gelber & Associates analysts in a note.
The UN’s shipping agency pushed back against Trump’s proposal, saying it opposes any fees for straits used in international navigation and stressing that there is no legal basis for introducing mandatory tolls on strait transits.
Sales have been slow, however, as China’s independent refiners have turned to cheaper crude from Iraq, the UAE and Qatar.
The Abu Dhabi National Oil Company set the August official selling price of its benchmark Murban crude at $80.01 a barrel, it said yesterday, down from $101.48 a barrel the month before.
Elsewhere, stocks of crude oil in the US Strategic Petroleum Reserve fell by about 3m barrels to 316.5m barrels last week, the lowest level since April 1983, according to data from the Department of Energy.
The drawdowns are a part of a US agreement to release 172m barrels from the facility.
On Wall Street, the Dow Jones Industrial Average fell 106.72 points, or 0.20pc, to 52,530.29, the S&P 500 was down 30.60 points, or 0.40pc, to 7,544.79 and the Nasdaq Composite fell 247.59 points, or 0.94pc, to 26,034.83.
The technology sector was adding pressure to indexes as investors sold off stocks related to artificial intelligence and particularly in semiconductors.
Included in the selloff were US-listed shares of SK Hynix, which fell 8.5pc after rallying sharply on their Nasdaq debut on Friday.
South Korea’s KOSPI sank nearly 9pc, after already losing more than 7pc last week, as bets on semiconductor shares came under pressure.
The market has emerged as a key global barometer for chip-sector sentiment and further losses could ripple out more broadly.
MSCI’s gauge of stocks across the globe was down 6.80 points, or 0.60pc, at 1,119.74. The pan-European STOXX 600 index fell 0.06pc.
The US dollar inched up as traders monitored geopolitics and how it might affect the rate outlook, just a day before the release of key US inflation data.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.06pc to 101.12, with the euro down 0.11pc at $1.14.
Against the Japanese yen, the dollar strengthened 0.4pc to 162.33.
Sterling weakened 0.2pc to $1.3378 at the start of a pivotal week in British politics as Andy Burnham is expected to be formally anointed as Labour leader on Friday and be officially named as UK prime minister on July 20.
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