Stocks Rally Set to Falter, Dollar Gains With Oil: Markets Wrap

(Bloomberg) — A global equity rebound that saw Asian shares rise for the first time since the Iran war began looks set to falter going into Europe as Middle-East tensions rise and stresses mount in energy markets.

Futures showed European shares may fall almost 0.6% from the open, and similar contracts indicated losses for US benchmarks. That comes after Asian shares advanced 2.3% with the South Korean gauge surging 9.6%, rebounding from its worst crash on record. Sentiment was initially boosted by a rally on Wall Street after economic data soothed inflation concerns.

The Bloomberg Dollar Spot Index rose for the third time in four sessions, reasserting its role as a haven in times of crisis.

While sentiment in the equity market rebounded, crude oil continued its advance on concern the Iran conflict may last longer than initially anticipated. Treasuries extended their recent declines, with the 10-year yield rising three basis points to 4.13%.

The rebound in Asian stocks reflected a reassessment of the war’s potential fallout, as investors weighed the risks of slower global growth and a renewed inflation shock from higher energy prices. Still, any recovery may prove fleeting without clearer visibility on the conflict’s duration.

“I think that market participants are looking and trying to say, ‘How is this going to play out? What’s the end game?’” David Solomon, Goldman Sachs Group Inc. chief executive officer, said in an interview on Bloomberg TV. “As they have more information in the coming days, the coming week or two, I think that will have an impact on risk premiums.”

Uncertainty about how long the conflict may last is compelling investors to look to recent history as a guide for markets.

Many are revisiting trades enacted after Russia’s 2022 invasion of Ukraine, betting that this week’s spike in energy prices will stoke inflation, sparking lasting strength in the dollar as well as weakness in bonds and stocks.

“Whether or not the ‘feel good’ sentiment of today can last depends on what headlines we get out of the Middle East over coming days,” said Tim Waterer, chief market analyst at KCM Trade. “Market sentiment can shift on a dime depending on whether escalation or de-escalation seems the more likely path at any given point.”

What Bloomberg strategists say…

Investors look to be treating the US-Israeli war on Iran as a risk blip similar to those that occurred over the past year under President Trump. That level of complacency means global equities — and US stocks in particular — are in danger of suffering steep declines in the event that oil prices remain elevated or surge higher again as the conflict drags on.

— Garfield Reynolds, MLIV Team Leader. For full analysis, click here.

Traders remained focused on energy markets. Oil extended gains as the Iran war disrupted crude flows to key importers.

Brent climbed toward $85 a barrel, after jumping 12% over the first three days of the week, while West Texas Intermediate was near $78. US President Donald Trump expressed confidence in the military campaign, even as the timeline for operations remained unclear. The Islamic Revolutionary Guard Corps, meanwhile, pledged to intensify and expand strikes in the coming days.

Elsewhere, China’s government told the country’s largest oil refiners to suspend exports of diesel and gasoline as the escalating conflict disrupts the arrival of crude from one of the world’s largest producing regions. Meanwhile, Chinese shares gained even as the country set its 2026 gross domestic product target at 4.5% to 5%, the lowest growth objective since 1991.

With virtually no oil or fuel making its way out of the Persian Gulf since US and Israeli attacks began at the weekend, refiners from Japan to Indonesia and India have begun cutting back run rates and suspending exports.

Meanwhile, Tehran targeted Israel and Gulf states while Israeli and American forces followed through on pledges to bomb targets in the Islamic Republic. The US sank an Iranian warship in international waters.

Iran also dismissed a report it had reached out to the US to negotiate an end to the conflict as “pure falsehood.” China, meanwhile, will dispatch its special envoy on Middle East affairs to the region to conduct mediation efforts.

“Investors are rightly treating pledges by President Donald Trump to re-open the Strait of Hormuz via the US IDFC offering insurance and the US Navy protection to transiting oil tankers with skepticism,” said David Forrester, senior forex strategist at Credit Agricole CIB in Singapore.

Corporate Highlights:

Morgan Stanley is laying off around 3% of its workforce or about 2,500 people, according to people familiar with the matter. Nvidia Corp. Chief Executive Officer Jensen Huang doesn’t see his company’s investments in OpenAI reaching $100 billion — the maximum amount that the chipmaking giant had once pledged to spend on the startup. Broadcom Inc. Chief Executive Officer Hock Tan said the company expects its AI chip sales to top $100 billion next year. Investors are boosting short positions in Blue Owl Capital Inc., betting the stock has more room to fall despite wiping out nearly one-third of its value this year. Anthropic PBC chief Dario Amodei has resumed discussions with the Pentagon about the way its AI models are used by the US military. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.3% as of 6:50 a.m. London time Nasdaq 100 futures fell 0.3% The MSCI Asia Pacific Index rose 2.3% Hong Kong’s Hang Seng rose 0.2% The Shanghai Composite rose 0.5% Euro Stoxx 50 futures fell 0.7% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1614 The Japanese yen was little changed at 157.00 per dollar The offshore yuan was little changed at 6.8965 per dollar The British pound fell 0.3% to $1.3333 Cryptocurrencies

Bitcoin fell 1.1% to $72,569.85 Ether fell 1% to $2,128.66 Bonds

The yield on 10-year Treasuries advanced two basis points to 4.11% Japan’s 10-year yield advanced 4.5 basis points to 2.155% Australia’s 10-year yield advanced five basis points to 4.80% Commodities

Spot gold rose 0.3% to $5,157.23 an ounce West Texas Intermediate crude rose 3.1% to $76.94 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Bernadette Toh, Gabrielle Ng, Aya Wagatsuma and David Finnerty.

©2026 Bloomberg L.P.