Oil Gains on Iran Deadlock, Stocks Drop on Korea: Markets Wrap
(Bloomberg) — Oil rose after President Donald Trump cast doubt on the Iran ceasefire, fueling concern that the closure of the Strait of Hormuz will be prolonged. Asian stocks retreated after calls in South Korea for a dividend using taxes on AI profits.
Brent crude climbed 1% to $105.30 a barrel as the stalled negotiations between the US and Iran and the continued closure of the strait indicated energy costs would stay elevated. That kept bonds under pressure, with the 10-year Treasury yield rising one basis point to 4.42%. The dollar strengthened against all its Group-of-10 peers on haven demand.
Korea’s Kospi — the world’s best-performing index this year with an 80% gain — tumbled 2.3%, after a top policymaker said the nation should pay citizens a dividend using taxes on AI profits. The comments by presidential policy chief Kim Yong-beom fueled sharp swings in Asian equities as investors struggled to parse the scope of his proposals.
MSCI’s Asian stock index fell 0.6%, while equity-index futures pointed to a 0.7% drop for European shares. Contracts for Wall Street benchmarks also declined after the underlying gauges closed at a record high on Monday.
Fresh Middle East tensions are set to challenge the rally in global equities, even as robust US earnings and a revival in the AI trade drive a fresh round of upgrades to Wall Street’s year-end targets. Attention is also turning to Tuesday’s US inflation data, which will show how much war-driven price pressures are feeding through and could shape the outlook for Federal Reserve interest rates.
Pressures from the Middle East haven’t yet had “a massive impact on the growth impulse in the US,” Colin Purdie, chief investment officer for public markets at Manulife Investment Management, said on Bloomberg Television. “That could come through if this goes on significantly longer than now. So right now we see the Fed on hold.”
What Bloomberg Strategists Say…
“The combination of soaring market worth and volatility for Kospi heavyweights Samsung and SK Hynix means sudden shifts in South Korea have an enhanced capacity to visit contagion on other assets.”
— Garfield Reynolds, MLIV Team Leader. For full analysis, click here.
The ceasefire between the US and Iran reached a particularly precarious moment as Trump said the agreement was on “massive life support” after he rejected Tehran’s latest peace offer. Trump called Iran’s response to his proposal a “piece of garbage” and said he “didn’t even finish reading it.”
Trump didn’t indicate whether the US would resume military attacks on Iran as he has previously threatened if the Islamic Republic’s leadership didn’t agree to his terms. Trump told Fox News earlier on Monday that he’s looking at reviving a plan to escort ships through the Strait of Hormuz.
“An agreement remains elusive and risks remain elevated,” said Mark Haefele at UBS Chief Investment Office. “Both sides remain under pressure to conclude a deal.”
Trump is heading to Beijing for a high-stakes summit with Chinese President Xi Jinping on Thursday, with trade and the war in Iran expected to dominate the agenda. The roster of business leaders invited to join Trump on his China trip left off Nvidia Corp. Chief Executive Officer Jensen Huang.
Elsewhere, traders will also be paying attention to the pound and gilt markets with Keir Starmer facing growing pressure to step down as prime minister.
While the Iran conflict has dragged on, the singular focus on a handful of AI leaders has kept the market remarkably immune to the latest developments in the Middle East, Tony Sycamore, a market analyst at IG Australia, wrote in a note.
Some on Wall Street are also concerned that elevated oil prices and fears about potential shortages could derail the stock rally.
Michael Burry, the investor made famous in The Big Short, has warned that the Nasdaq 100 Index is headed toward a dramatic reversal after a “parabolic” surge that has driven technology valuations to unsustainable heights.
“The biggest concern is we’ve had a buffer on energy prices and there are arguments about when that stops out. When do we hit the bottom of the tanker and when does this really become an issue,” Sarah Hunt, chief market strategist at Alpine Saxon Woods, said in an interview with Bloomberg Television.
Corporate News:
Thyssenkrupp AG maintained its key earnings and cash-flow targets, while striking a more cautious note on sales because of heightened geopolitical uncertainty and its impact on international markets. Bayer AG posted better-than-expected profit in the first quarter, driven by a robust performance in its crop-science unit. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 6:50 a.m. London time Nasdaq 100 futures fell 0.5% The MSCI Asia Pacific Index fell 0.5% The MSCI Emerging Markets Index fell 0.9% Japan’s Topix rose 0.8% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng rose 0.1% The Shanghai Composite fell 0.5% Euro Stoxx 50 futures fell 0.7% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1756 The Japanese yen fell 0.3% to 157.73 per dollar The offshore yuan was unchanged at 6.7919 per dollar The British pound fell 0.3% to $1.3570 Cryptocurrencies
Bitcoin fell 0.7% to $81,225.57 Ether fell 1.1% to $2,311.45 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.42% Japan’s 10-year yield advanced three basis points to 2.545% Australia’s 10-year yield advanced three basis points to 5.02% Commodities
Spot gold fell 0.5% to $4,714.62 an ounce West Texas Intermediate crude rose 1.4% to $99.43 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi and Masaki Kondo.
©2026 Bloomberg L.P.
