Oil Gains on Iran Deadlock, Stocks Swing on Korea: Markets Wrap
(Bloomberg) — Oil rose after President Donald Trump cast doubt on the Iran ceasefire, prolonging the closure of the Strait of Hormuz. Asian stocks whipsawed after calls for a potential AI dividend in South Korea.
Brent crude climbed almost 1% to above $105 a barrel as the stalled negotiations between the US and Iran and the continued closure of the Strait of Hormuz indicated energy costs will stay elevated.
Higher oil prices kept bonds under pressure, with the Treasury 10-year yield rising one basis point to 4.42%, adding to the six basis point gain on Monday. Government bonds of similar maturity in Japan and Australia also slipped. The dollar strengthened against all its Group-of-10 peers on demand for haven assets.
MSCI’s Asia Pacific stock index swung between gains and losses. Korea’s Kospi slid as much as 5.1% before paring declines, after a top policymaker said the country should pay all citizens a share of AI profits. US equity-index futures also dropped after the Wall Street gauges closed at a record high on Monday.
Fresh Middle East tensions are set to challenge the rally in global equities, where robust US earnings and a revival in the AI trade have driven a fresh round of upgrades to Wall Street’s year-end targets. Attention is also turning to Tuesday’s US inflation reading, which will show how much of the war-driven price pressures are feeding through and may shape the outlook for interest rates.
“Markets are pricing both AI-driven growth and the Middle East supply shock,” said Jean Boivin, head of BlackRock Investment Institute. The buildout of AI data centers is offsetting the oil supply shock’s “drag on growth,” he said.
The whipsawing of stocks in Korea, a major beneficiary of the AI buildout, was the dominant theme among Asian equities. That came after Presidential policy chief Kim Yong-beom said a portion of the profits and tax revenue derived from the artificial intelligence boom “should be structurally returned to all citizens.”
The AI dividend proposal doesn’t mean a windfall tax, Kim said.
Meanwhile, the ceasefire in the Middle East appeared to waver, with Trump calling Iran’s response to his peace proposal a “piece of garbage” and that he “didn’t even finish reading it.”
Trump didn’t indicate whether the US would resume military attacks on Iran as he previously has 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.”
Traders will also be paying attention to the pound and gilt markets with Keir Starmer facing growing pressure to step down as prime minister. Focus is also on the rupee with the Indian government considering emergency steps to shore up foreign-exchange reserves, including curbing non-essential imports like gold and electronic goods.
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.
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 12:11 p.m. Tokyo time Nikkei 225 futures (OSE) rose 0.8% Japan’s Topix rose 0.6% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng rose 0.4% The Shanghai Composite was little changed Euro Stoxx 50 futures fell 0.5% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1759 The Japanese yen fell 0.3% to 157.60 per dollar The offshore yuan was little changed at 6.7924 per dollar Cryptocurrencies
Bitcoin fell 0.7% to $81,221.53 Ether fell 1% to $2,314.57 Bonds
The yield on 10-year Treasuries was little changed at 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
West Texas Intermediate crude rose 1% to $99.04 a barrel Spot gold fell 0.2% to $4,728.35 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Toby Alder, Abhishek Vishnoi and Geoffrey Morgan.
©2026 Bloomberg L.P.
