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Oil rally unsettles global equity markets

A renewed jump in crude prices following Washington’s decision to restore its blockade of Iranian shipping heightened inflation concerns on Monday and weighed on Wall Street, particularly technology shares. European equities finished broadly flat, while most Asian markets recovered from early weakness on Tuesday even as oil extended its gains. Spot gold was up 0.7% to around USD 4030 per ounce on Tuesday after tumbling almost 3% on Monday and briefly falling below USD 4000 for the first time in three weeks, while the US Dollar Index retreated slightly. Attention now turns to Tuesday’s US Consumer Price Index for signals on the Federal Reserve’s policy outlook, alongside quarterly results from several major US banks.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Oil tanker
© Shutterstock

il prices continued to rise on Tuesday following sharp gains at the start of the week. Brent crude oil futures advanced another 1.8% to USD 84.83 per barrel, while West Texas Intermediate (WTI) futures gained 2% to USD 79.71 per barrel. The increases came after US President Donald Trump announced plans to reinstate a blockade targeting vessels travelling to or from Iranian ports and impose a 20% fee on all cargo passing through the Strait of Hormuz. The blockade is scheduled to take effect on Tuesday following renewed US strikes against Iran and retaliatory attacks on American facilities in the Gulf.

Asian stocks rebound

Asian equities mostly rebounded by late Tuesday despite persistent concerns that rising oil prices could fuel inflation. Korea’s Kospi gained 1.4%, Japan’s Nikkei 225 rose 0.7% and Hong Kong’s Hang Seng Index added 0.2%. Australia’s S&P/ASX 200 was little changed, while India’s Nifty 50 declined 0.3%. While mainland China’s CSI 300 advanced 1.3% after June trade growth exceeded forecasts, investors awaited US inflation data due today.

China’s exports surge on AI demand

China’s exports increased 27% year-on-year in June, accelerating from 19.4% in May and exceeding market expectations, customs data showed on Tuesday. Imports climbed 36%, their strongest rise in five years, compared with 27.4% in May, while the trade surplus widened to USD 125.6 billion from USD 105.4 billion. Robust global demand for semiconductors and computing equipment supported trade, although higher chip prices also inflated import values. Weak consumption and a prolonged property downturn continued to weigh on China’s domestic economy, increasing manufacturers’ reliance on overseas customers.

US stocks fall on Iran tensions

US equities declined on Monday as escalating tensions with Iran and weakness in highly valued technology shares weighed on sentiment, with the Dow Jones Industrial Average down 0.3% at 52,498.64 points. The S&P 500 dropped 0.8% to 7515.34 points, while the Nasdaq-100 slid 1.9% to 29,264.10 points. US President Trump announced a renewed naval blockade of vessels using Iranian ports following further US attacks and threatened to charge ships for safe passage through the Strait of Hormuz. Higher oil prices supported energy stocks, while semiconductor maker SK Hynix tumbled 9.3% after its strong US market debut on Friday.

European stocks steady despite Iran tensions

European equities ended mixed on Monday as investors largely shrugged off renewed hostilities between the US and Iran, with the Euro Stoxx 50 little changed at 6269.45 points. The Swiss Market Index gained 0.2% to 14,266.18 points, although rising oil prices raised concerns about renewed inflationary pressure. Technology stocks weakened, with Infineon and ASML among the major losers.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Wells Fargo.

Economic data in focus: Swiss Producer and Import Price Index (08:30), US Consumer Price Index (14:30) and European Central Bank President Christine Lagarde speaks (15:00).

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