Stocks Fall as Oil Climbs on Middle East Flare-Up: Markets Wrap

(Bloomberg) — Stocks fell as traders navigated an escalation in tensions between the US and Iran, sending Brent crude toward its biggest two-day jump in nearly two months. South Korea’s Kospi Index entered a bear market.

S&P 500 and Nasdaq 100 futures extended losses from the previous session’s selloff in chipmakers. Brent advanced 2.2% to $75.84 a barrel after the US carried out a new round of strikes in Iran and revoked a waiver allowing sales of its oil. Europe’s Stoxx 600 fell for a third straight day as higher energy prices drove a jump in the region’s bond yields.

In Asia, the Kospi fell more than 5%, extending losses since last month’s high to 20%, as the artificial-intelligence rotation trade accelerated, with investors shifting out of semiconductor stocks in search of more attractive valuations tied to the technology boom. Alibaba Group Holding Ltd. jumped 12% in Hong Kong as mainland Chinese stocks rallied.

The renewed hostilities in the Middle East risk undermining the interim US-Iran peace deal reached last month while oil’s rebound threatens a fresh wave of disruption to energy markets. A handful of vessels appeared to transit the Strait of Hormuz in the early hours of Wednesday, even after a spate of strikes on tankers left shipowners struggling to assess operational risks.

While the latest escalation in hostilities posed a setback to a lasting deal, the modest move in stocks signaled that traders were confident it wouldn’t derail the peace process, said Richard Flax, chief investment officer at Moneyfarm.

“The market is pricing in the idea that these are, from a financial markets perspective, bumps in the road toward a resolution, whatever that looks like,” Flax said. “It doesn’t materially shift expectations for the global economy.”

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 fell 0.7% as of 8:33 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average fell 0.4% The MSCI Asia Pacific Index fell 0.5% The MSCI Emerging Markets Index fell 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1430 The Japanese yen was little changed at 162.20 per dollar The offshore yuan was little changed at 6.8008 per dollar The British pound was little changed at $1.3367 Cryptocurrencies

Bitcoin fell 1.4% to $62,799.03 Ether fell 1.6% to $1,754.72 Bonds

The yield on 10-year Treasuries was little changed at 4.54% Germany’s 10-year yield advanced four basis points to 3.03% Britain’s 10-year yield advanced four basis points to 4.89% Commodities

Brent crude rose 2.3% to $75.85 a barrel Spot gold rose 0.5% to $4,125.22 an ounce This story was produced with the assistance of Bloomberg Automation.

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