Stocks, Bonds Tumble as War Fuels Inflation Fears: Markets Wrap
(Bloomberg) — Stocks fell and bonds extended losses as the war in Iran entered its fourth day with no sign of de-escalation, heightening fears of a lengthy disruption to energy markets and a surge in inflation.
S&P 500 futures tumbled 1.5% after dip buyers erased a similar loss in the previous session. Nasdaq 100 contracts slumped 2%. European and Asian equity benchmarks headed for their worst two-day drop since April. European gas added 27% to Monday’s gains as the world’s largest LNG export plant in Qatar remained shut. Brent crude rose more than 5% to nearly $82 a barrel.
Concern that energy prices could remain elevated pushed global yields higher for a second day. European debt was among the hardest hit, given the region’s greater exposure to higher oil and gas costs.
The rate on 10-year UK gilts surged 12 basis points as money markets priced out a second Bank of England rate cut in 2026. Ten-year Treasury yields climbed six basis points to 4.09%. The dollar remained the haven of choice, rising 0.6%.
As the US-Israeli war on Iran reverberated across the Middle East, President Donald Trump insisted there was no fixed timeline while Secretary of State Marco Rubio said “the hardest hits are yet to come.” The US embassy in Riyadh was attacked by drones, while Israel sent soldiers into southern Lebanon, where the Iran-aligned Hezbollah militia is based.
“Comments from the White House yesterday suggest a will to make the conflict more durable and to do whatever it takes,” said Emma Moriarty, portfolio manager at CG Asset Management. “Statements like this force markets to digest more fully the lasting consequences – most proximately for inflation and energy prices – for equity market performance.”
What Bloomberg strategists say…
The investor playbook for Iran has been ripped up, and markets haven’t repriced to the new paradigm yet. The next few weeks are going to be volatile and negative for many so-called risk assets. The Pavlovian response has been to both buy the dip and dismiss the threat from geopolitical risks. But that’s “an automatic, conditioned response,” rather than one borne out of thoughtful consideration or analysis.
— Mark Cudmore, MLIV Executive Editor. For full analysis, click here.
Corporate Highlights:
Blackstone Inc. is allowing investors to redeem a record 7.9% of shares from its flagship private credit fund, the latest sign of unease in an industry that’s faced a wave of withdrawals. US officials are considering caps on the number of AI accelerators Nvidia Corp. can export to any one Chinese company, which would further constrain the chipmaker’s reentry into a crucial market. Fitch Ratings downgraded Paramount Skydance Corp.’s corporate and long-term borrower ratings to junk following the media company’s agreement to buy larger rival Warner Bros. Discovery Inc. The roughly $17.5 billion of debt tied to Elon Musk’s social network X and artificial intelligence startup xAI is set to be paid back in full, according to people with knowledge of the matter. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 2.7% as of 9:22 a.m. London time S&P 500 futures fell 1.5% Nasdaq 100 futures fell 2% Futures on the Dow Jones Industrial Average fell 1.4% The MSCI Asia Pacific Index fell 3.1% The MSCI Emerging Markets Index fell 3.2% Currencies
The Bloomberg Dollar Spot Index rose 0.5% The euro fell 0.6% to $1.1620 The Japanese yen was little changed at 157.54 per dollar The offshore yuan was little changed at 6.9005 per dollar The British pound fell 0.8% to $1.3302 Cryptocurrencies
Bitcoin fell 3.4% to $67,047.21 Ether fell 3.9% to $1,963.72 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.09% Germany’s 10-year yield advanced seven basis points to 2.78% Britain’s 10-year yield advanced 11 basis points to 4.48% Commodities
Brent crude rose 5.2% to $81.78 a barrel Spot gold fell 0.5% to $5,296.51 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling and Anand Krishnamoorthy.
©2026 Bloomberg L.P.
