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Oil worries pressure stocks

Oil prices extended their advance on Tuesday after the lapse of the US-Iran ceasefire heightened concerns about shipping through the Strait of Hormuz, weighing on Asian equities while supporting energy shares. US stocks ended Monday lower as uncertainty in the Middle East outweighed renewed enthusiasm for AI-linked companies. Rising government bond yields added to pressure on equities as investors reassessed the outlook for inflation and interest rates.

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

Oil tanker
© Shutterstock

Oil prices reached their highest levels in almost three weeks on Tuesday as the expiry of the US-Iran ceasefire left the dispute over the Strait of Hormuz unresolved. Brent crude oil futures gained 0.7% to USD 91.46 per barrel and West Texas Intermediate (WTI) futures rose 0.8% to USD 84.41, after US President Donald Trump ruled out extending the ceasefire on Monday. Gold fell 0.5% to around USD 4400 per ounce, while the US Dollar Index edged up 0.1% to 99.65. A cargo vessel was hit while crossing the strait on Tuesday, adding to security concerns, while commercial shipping remained far below pre-war levels despite negotiations between Iran and Oman on alternative routes. The waterway carried about one-fifth of global oil and gas supplies before the conflict.

Asian shares fall as yields rise

Asian equities declined on Tuesday as rising oil prices and government bond yields revived inflation and interest-rate concerns. Japan’s Nikkei 225 fell 2.1%, South Korea’s Kospi lost 1.3% and Hong Kong’s Hang Seng Index declined 0.6%, while mainland China’s CSI 300 fell 0.9%. India’s Nifty 50 lost 0.4% and Australia’s S&P/ASX 200 gained 0.1%. The US 30-year Treasury yield reached 5.3%, its highest level since June 2007, while the 10-year yield was trading higher around 4.7% and the 2-year yield was also higher around 4.2%. Technology stocks led the retreat despite continued AI investment, although energy shares gained as fading hopes of a swift US-Iran agreement heightened concerns over oil supplies through the Strait of Hormuz.

US stocks decline amid Middle East tensions

US equities closed lower on Monday as deteriorating prospects for peace in the Middle East weighed on investor sentiment. The Dow Jones Industrial Average fell 0.5% to 53,459.78 points, while the S&P 500 lost 0.5% to 7745.06 points and the Nasdaq-100 declined 0.2% to 29,995.38 points. AI-related shares nevertheless advanced on encouraging revenue signals from Anthropic.

European stocks dip

European equities ended modestly lower on Monday as uncertainty over the Iran conflict and the Strait of Hormuz prompted investors to take a more cautious stance. The Euro Stoxx 50 slipped 0.2% to 6527.35 points, remaining close to its record high reached last week, while Switzerland’s SMI fell 0.6% to 14,302.39 points. Healthcare shares outperformed after Belgian biotechnology company Argenx surged more than 17% to a record high on positive phase-three trial results for a treatment targeting a rare inflammatory muscle disease. Technology shares also gained.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Home Depot and Xiaomi.

Economic data in focus: UK unemployment rate (08:00), German ZEW Indicator of Economic Sentiment (11:00), US building permits (14:30) and US manufacturing production (15:15).

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