Rising tensions in the Gulf are driving oil prices higher and putting pressure on stocks, bonds, and currencies worldwide.
Global markets began the week on edge after Iran and the United States exchanged attacks in the Gulf, with Tehran claiming it had closed the Strait of Hormuz, one of the world's most important oil shipping routes.
President Donald Trump said the waterway remained open to commercial traffic, while U.S. officials reported that 20 ships had been escorted through the strait during the past 24 hours. However, shipping activity appears to be slowing sharply.
Key Details
The UK Maritime Trade Operations (UKMTO) said vessel transits had already fallen to 10 by Friday. Ship-tracking data also showed no vessels moving through the narrowest part of the strait on Monday, or at least none with active transponders.
The threat to energy supplies sent Brent and U.S. crude prices nearly 4% higher. European stock futures fell around 0.6%, while Japan's Nikkei led declines across Asian markets.
Nasdaq futures also dropped 0.6% as investors prepared for a busy earnings week featuring major banks, Netflix, and General Electric.
Bank of America warned that the AI spending boom is hurting cash generation. Hyperscalers have already spent $234 billion this year, and forward free cash flow is expected to turn negative for the first time since at least 2007.
Market Reaction
The U.S. dollar strengthened broadly, and Treasury yields climbed slightly. The dollar rose to 162.05 yen, while the British pound slipped to $1.3381 ahead of a major political week in the UK.
Why It Matters
Any disruption in the Strait of Hormuz could push energy prices even higher, increase inflation risks, and complicate the Federal Reserve's path on interest rates.
What to Watch Next
Traders are now focused on U.S. inflation data, comments from central bank officials, and corporate earnings that could determine whether markets stabilize or face another wave of volatility.
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Source: Reuters
Time: 11:00 AM EEST
