Stocks Sink as Yields Spike After Oil Hit $100: Markets Wrap
(Bloomberg) — Stocks tumbled as the war in the Middle East fueled turmoil in energy markets, sending oil above $100 a barrel for the first time since 2022. Bond losses accelerated while the dollar hit its highest level since January.
S&P 500 futures fell 1.3% as the opposing sides in the Iranian conflict showed little sign of backing down. Brent soared 15% to $107 a barrel after Middle Eastern producers cut output, deepening fears of an inflation shock and lifting the 10-year Treasury yield five basis points to 4.19%. The dollar rose 0.6%.
Europe’s index of blue-chip stocks was set for a correction. The selloff in the region’s government bonds was deeper than in the US as traders priced in 50 basis points of European Central Bank interest-rate hikes this year and more than a 50% chance of a Bank of England increase. Traders expected the ECB to stand pat in 2026 less than two weeks ago.
The US and Iran appeared to be digging in for a potentially lengthy conflict. Iran named the son of the late Ayatollah Ali Khamenei as its new supreme leader, while President Donald Trump said higher oil prices were a “very small price to pay” for safety. Still, talk of a coordinated crude reserve release helped pare back some of the session’s worst losses.
“Brent above $100 is a real risk for inflation and the economy,” said Andrea Gabellone, head of global equities at KBC Securities. “The EU economy is the most vulnerable with a double hit from the oil and gas price spike, and let’s not forget, another war closer to home.”
Selling swept across regions and asset classes as the geopolitical flareup added fresh stress to markets that are already under pressure from AI disruptions and worries about the potential for cracks in credit markets.
“The market is anticipating the worst-case scenario,” said David Kruk, head of trading at La Financiere de l’Echiquier in Paris. “The selloff is all about oil, it’s about the inflation that is deduced from it, it’s about the risk of stagflation.”
What Bloomberg strategists say…
“The moves in stocks and bonds continue to look worse in Europe than the US. All this has come even as we have seen a pullback from the highs in oil. The bar to restore order to the market is a high one and traders are focused on the bigger picture of the conflict.”
— Adam Linton, macro strategist. For full analysis, click here.
Arab states across the Persian Gulf and Israel continued to face incoming missiles and drones from Iran, which said it had the capacity to sustain the war for months. Israel struck fuel depots in Tehran and threatened the Islamic Republic’s power grid.
Trump is also weighing the option of deploying special forces on the ground to seize Iran’s near-bomb-grade uranium, as officials grow increasingly concerned the stockpile may have been moved, according to three diplomatic officials briefed on the matter.
“Our base case still assumes that oil prices will ultimately retreat below $100 as policy responses and market adjustments ease supply fears, although the weekend’s news flow raises the probability of a more persistent energy shock,” said Mathieu Racheter, head of equity strategy at Julius Baer.
Gold fell, pressured by a stronger dollar and concerns over higher rates. Bullion has come under pressure as spiking crude prices stoke inflation fears in the US, raising the likelihood that the Federal Reserve will leave interest rates unchanged for longer.
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 2.2% as of 8:39 a.m. London time S&P 500 futures fell 1.3% Nasdaq 100 futures fell 1.4% Futures on the Dow Jones Industrial Average fell 1.6% The MSCI Asia Pacific Index fell 3.9% The MSCI Emerging Markets Index fell 3.4% Currencies
The Bloomberg Dollar Spot Index rose 0.6% The euro fell 0.9% to $1.1518 The Japanese yen fell 0.6% to 158.65 per dollar The offshore yuan fell 0.3% to 6.9262 per dollar The British pound fell 0.8% to $1.3307 Cryptocurrencies
Bitcoin rose 0.8% to $67,745.3 Ether rose 1.8% to $1,993.59 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.19% Germany’s 10-year yield advanced three basis points to 2.89% Britain’s 10-year yield advanced 15 basis points to 4.77% Commodities
Brent crude rose 15% to $107.01 a barrel Spot gold fell 1.5% to $5,096.08 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Julien Ponthus and Anand Krishnamoorthy.
©2026 Bloomberg L.P.
