Oil and gas prices jumped, stock markets slid and government bond yields rose after the US and Iran traded fresh strikes and Donald Trump said the shaky ceasefire was “over”.
Oil and Gas Prices Surge
Brent crude, the global benchmark, climbed 5% to $77.86 a barrel. The increase came after renewed hostilities between the US and Iran, raising concerns about supply disruptions in the Middle East.
Stock Markets Tumble Worldwide
In stock markets, the UK’s FTSE 100 fell 1%, or 110 points, to 10,556 while Germany’s Dax tumbled 1.6% and Spain’s Ibex lost 2%. Speaking at a NATO summit in Ankara, Trump also said he was cutting off trade with Spain over defence spending.
On Wall Street, the S&P 500 index fell nearly 0.5% while the Dow Jones slid 0.9% and the Nasdaq slipped 0.3%.
In Asia, Japan’s Nikkei ended the day 2.1% lower while China’s CSI 300 declined 0.77% and South Korea’s Kospi tumbled 5.5%, also hit by a sell-off in semiconductor shares.
Bond Yields Rise on Inflation Fears
Eurozone government bond yields rose to their highest levels in almost a month, as higher oil prices stoked inflation fears. The yield, or interest rate, on Germany’s 10-year bond rose 5 basis points to 3.034%, the highest since 11 July, as bonds sold off (yields move inversely to prices). The two-year bond yield, which is more sensitive to European Central Bank interest rate expectations, also climbed 5bps, to 2.637%, the highest since 22 June.
The yield on the 10-year UK government bond, known as gilt, climbed 9bps to 4.94%.
