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<\/p>\n(Bloomberg) — Stocks fell and crude oil surged as an escalation in the Middle East conflict hit markets, prompting investors to trim risk exposure and seek haven assets.<\/p>\n
Asian shares fell 1.2%, while equity-index futures for US benchmarks dropped 0.6%, recovering from earlier session lows. Brent surged as much as 13% \u2014 before paring gains \u2014 as the conflict plunged the global crude market into turmoil, with the effective closure of the Strait of Hormuz.<\/p>\n
Most Read from Bloomberg<\/p>\n
Some of the steepest moves retraced as President Donald Trump told the New York Times that he was open to dropping sanctions on Iran if its new leader was pragmatic. Iran also made a fresh push to resume talks with the US, the Wall Street Journal reported.<\/p>\n
All eyes are on the status of the Strait of Hormuz, which is crucial for the flow of oil to the rest of the world. As investors shunned risk, some haven assets got a bid. Gold rose 0.9% to trade around $5,325 an ounce, off the session highs. But, the dollar pared its advance and Treasuries erased earlier gains.<\/p>\n
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\u201cMarkets are pricing a limited conflict, with broader investment implications still manageable unless escalation proves prolonged,\u201d Adam Hetts, Global Head of Multi-Asset at Janus Henderson, wrote in a note. \u201cAs always, diversification and a long\u2011term perspective matter most when uncertainty peaks.\u201d<\/p>\n
Shaken by fresh anxieties over artificial intelligence and potential cracks in credit, all while trading at historically high valuations, stock markets must now contend with the spiraling military action in Iran and the broader region that threatens to destabilize global shipping and limit travel. The impact on oil and inflation is of paramount concern in markets that last month saw US stocks post their worst drop since April.<\/p>\n
Bloomberg Economics said that if the Strait of Hormuz is closed, then it could trigger a spike as high as $108. About one-fifth of global oil flows pass through the waterway, making it a critical energy choke point.<\/p>\n
Read: Iran Strikes Lift Asian Energy, Defense Stocks; Airlines Drop<\/p>\n
Digital signals indicate that oil-tanker traffic through Hormuz has nearly halted, and three ships were attacked near the mouth of the Persian Gulf, heightening fears that supplies could tighten.<\/p>\n
\u201cHistory tells us that geopolitical shocks tend to produce sharp initial moves in oil and safe havens that often fade relatively quickly if the conflict proves contained,\u201d said Josh Gilbert, market analyst at eToro Ltd. \u201cUntil there are clear signals of de-escalation, investors should expect elevated volatility across oil, gold, currencies, and equities throughout the week ahead.\u201d<\/p>\n
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What Bloomberg strategists say …<\/p>\n
We have very big jumps in energy prices, as expected, but most other moves are relatively contained and almost everything has pared back from the opening extremes. There is no broad markets panic yet.<\/p>\n
\u2014 Mark Cudmore, MLIV Executive Editor. For full analysis, click here.<\/p>\n
Strategists at Barclays Plc warned against quickly buying any dip. Investors have grown accustomed to geopolitical flare-ups that fade fast, but this episode risks lasting longer, wrote Ajay Rajadhyaksha, the firm\u2019s global chairman of research, citing the potential for US casualties, strikes on Iranian leadership and disruption to Hormuz traffic.<\/p>\n
\u201cThe risk-reward doesn\u2019t seem compelling,\u201d he said. \u201cIf equities pull back enough (say over 10% in the S&P 500), there is likely to come a time to buy. But not yet.\u201d<\/p>\n
Geopolitical risks are adding a new layer of concern for markets after the disruptive potential of AI roiled stocks across sectors for weeks in the US, in what\u2019s become known as the \u201cAI scare trade.\u201d Issues related to private credit \u2014 a key funding source for technology companies \u2014 have also weighed. Even before Monday\u2019s jump in oil prices, data on Friday showed a hotter-than-estimated reading on US producer prices.<\/p>\n
WATCH: Bloomberg Intelligence\u2019s Mike McGlone explains what the US and Israeli strikes on Iran mean for oil and commodities prices.Source: Bloomberg <\/p>\n
Any long-lasting oil price spike would also muddy the case for Treasuries. While a flight to safety in markets would cause yields to fall, higher energy prices that feed through the economy and stoke inflation drive them higher.<\/p>\n
\u201cEven without a formal closure of the Strait of Hormuz, the reality is that vessels rerouting and sharply higher insurance premiums effectively tighten supply conditions,\u201d said Dilin Wu, a strategist at Pepperstone. \u201cThat alone embeds a fresh inflationary impulse into the global economy.\u201d<\/p>\n
The possibility of prolonged turmoil in the Middle East and the ripple effects of higher oil prices are giving money managers fresh reasons to sell equities and shift into safety. Rich valuations across global equities and credit also make it easier for investors to trim risk.<\/p>\n
\u201cThis is all coming at a fragile time as investors are becoming more cautious,\u201d said Dec Mullarkey, managing director at SLC Management. \u201cUS equity markets are already very sensitive to threats of technology disruption and emerging credit stress, so the prospects of higher commodity prices could force a selloff as investors rein in risk.\u201d<\/p>\n
Some of the main moves in markets:<\/p>\n
Stocks<\/p>\n
S&P 500 futures fell 0.6% as of 10:28 a.m. Tokyo time<\/p>\n
Japan\u2019s Topix fell 1.2%<\/p>\n
Australia\u2019s S&P\/ASX 200 fell 0.6%<\/p>\n
Hong Kong\u2019s Hang Seng fell 1.2%<\/p>\n
The Shanghai Composite fell 0.3%<\/p>\n
Euro Stoxx 50 futures fell 1.3%<\/p>\n
Currencies<\/p>\n
The Bloomberg Dollar Spot Index rose 0.2%<\/p>\n
The euro fell 0.2% to $1.1783<\/p>\n
The Japanese yen fell 0.3% to 156.45 per dollar<\/p>\n
The offshore yuan was little changed at 6.8683 per dollar<\/p>\n
Cryptocurrencies<\/p>\n
Bitcoin rose 1.5% to $66,630.66<\/p>\n
Ether rose 2.1% to $1,969.54<\/p>\n
Bonds<\/p>\n
The yield on 10-year Treasuries advanced three basis points to 3.96%<\/p>\n
Japan\u2019s 10-year yield declined two basis points to 2.090%<\/p>\n
Australia\u2019s 10-year yield declined one basis point to 4.64%<\/p>\n
Commodities<\/p>\n
West Texas Intermediate crude rose 4.7% to $70.16 a barrel<\/p>\n
Spot gold rose 0.9% to $5,324.94 an ounce<\/p>\n
This story was produced with the assistance of Bloomberg Automation.<\/p>\n
–With assistance from Carmeli Argana, Matthew Burgess, Natalia Kniazhevich, Sid Verma and Muyao Shen.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Stocks fell and crude oil surged as an escalation in the Middle East conflict hit markets,…\n","protected":false},"author":2,"featured_media":498498,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[7904,28,160,801,4011,942,114,210369],"class_list":{"0":"post-498497","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bloomberg","9":"tag-business","10":"tag-investors","11":"tag-iran","12":"tag-oil-prices","13":"tag-president-donald-trump","14":"tag-stock-markets","15":"tag-strait-of-hormuz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/498497","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=498497"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/498497\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/498498"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=498497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=498497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=498497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}