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Oil spike adds to AI-driven rout

Oil prices jumped on Monday after Iran and Israel exchanged strikes, deepening investor caution at a time when the sell-off in AI-related technology shares is already weighing heavily on global equities. US stocks closed sharply lower on Friday after a strong US jobs report lifted Treasury yields and reinforced expectations that the Federal Reserve will keep rates high, while Asian markets were trading in the red on Monday, with steep losses in Japan and South Korea led by chipmakers and other technology shares. Brent crude climbed, while gold fell further and US Treasury yields remained elevated. Investors will now look ahead to US inflation data on Wednesday and the ECB’s policy decision on Thursday for the next major signals on prices and interest rates.

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

Falling market
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Oil prices climbed on Monday after Iran and Israel exchanged strikes, fuelling concerns that the conflict could broaden and threaten regional stability despite a fragile ceasefire. Brent crude oil was trading around USD 97.43 per barrel and West Texas Intermediate (WTI) was at USD 94.53, as Israel said it had struck military targets in Iran and US President Donald Trump warned the renewed missile attacks would hinder negotiations. The US dollar remained strong to start the week, while US Treasury yields were higher across the curve after a spike on Friday, with the 2-year yield at 4.2% and the 10-year yield at 4.6%. Gold extended its decline in Asian trading on Monday, falling below USD 4300 per ounce after touching the lowest level since March.

Asian tech stocks extend retreat

Asian semiconductor shares fell sharply on Monday as the recent AI-driven rally lost momentum, with South Korea and Japan suffering the heaviest losses. South Korea’s SK Hynix and Samsung Electronics dropped 5.4% and 8.7%, while Japan’s SoftBank fell 8% and, pulling the Nikkei 225 down 4.5%. Korea’s Kospi was plunged 7.8%. Hong Kong’s Hang Seng Index was trading 1.8% lower and mainland China’s CSI 300 fell 2.4%, while Australia’s S&P/ASX 200 was down 0.7%. Macroeconomic data couldn't support markets, with Japan’s economy growing an annualised 1.8% in the first quarter, revised lower from 2.1%, according to data released on Monday, as weak business investment offset support from private consumption and exports.

US tech sell-off deepens

US stocks fell sharply on Friday, led by technology shares, after a stronger-than-expected US jobs report reinforced expectations that the Federal Reserve could raise interest rates by 0.25 percentage points by year-end. The Nasdaq 100 slumped 4.8% to 28,957.60 points, its steepest one-day drop since April 2025, while the S&P 500 lost 2.6% to 7,383.74 and the Dow Jones Industrial Average declined 1.4% to 50,866.78. Chipmakers such as Arm, Marvell, Micron, AMD and Nvidia were among the biggest losers as investors took profits in richly valued AI-related stocks.

US payroll growth tops forecasts

US non-farm payrolls rose by 172,000 in May, data released by the Bureau of Labor Statistics showed on Friday, easing from an upwardly revised 179,000 in April but coming in well above market expectations, while the unemployment rate remained at 4.3%. Average hourly earnings increased by 0.3% from the previous month and by 3.4% from a year earlier. Job gains were led by leisure and hospitality, local government and healthcare, while upward revisions to March and April also pointed to a firmer labour market trend. The stronger-than-expected data is likely to support expectations that the Federal Reserve will leave interest rates unchanged at its next policy announcement, due next week.

ECB decision, US inflation in focus

This week, in addition to geopolitical developments, monetary policy and inflation will dominate markets, with the European Central Bank (ECB) announcing its latest interest rate decision on Thursday and US consumer price data for May due on Wednesday. The ECB’s decision and Christine Lagarde’s press conference will be closely watched for signals on the euro area outlook and the path of policy given geopolitical uncertainties in the Middle East and the inflation spike stemming from the conflict. In the United States, both Consumer Price Index data on Wednesday and Producer Price Index figures on Thursday will provide an important update on inflation trends, while the University of Michigan consumer sentiment survey on Friday will offer a read on household confidence and inflation expectations. Elsewhere, China releases May consumer and producer price data on Wednesday, while Friday brings final May inflation readings from Germany and France as well as April gross domestic product data from the UK.

Euro-area GDP falls in first quarter

Euro-area gross domestic product (GDP) shrank by 0.2% in the first quarter, Eurostat said on Friday, reversing growth of 0.2% in the fourth quarter, while annual growth slowed to 0.3% from 1.2%. The decline was driven by weaker trade, lower investment and a fall in inventories, although household and government spending both made small positive contributions. European stock indices closed lower on Friday. The Euro Stoxx 50 fell 0.7%, while Germany’s DAX lost 0.8% and France’s CAC 40 declined 0.3%. Switzerland’s Swiss Market Index, by contrast, gained 0.4%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: SECO Swiss consumer sentiment (09:00), Sentix investor confidence for the eurozone (10:30).

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Editor: Alessandro Fezzi
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