AWARDS
Stocks and bonds fell, while oil prices rose, after renewed attacks in the Middle East dampened optimism for a deal to end the conflict. The dollar strengthened.
The MSCI All Country World Index, the broadest global equity gauge, fell 0.4% from its all-time high. An Asian stock index lost 2%, ending a five-day rally fueled by hopes of a peace agreement and continued strength in technology stocks. Futures suggest the weakness will likely extend to U.S. and European markets.
Brent crude oil rose nearly 3.7%, reaching around $98 a barrel, after U.S. forces launched airstrikes against an Iranian military facility and imposed new sanctions aimed at preventing Tehran from profiting from shipping through the Strait of Hormuz. U.S. officials described the attacks as defensive, while Iran claimed it targeted a U.S. air base.
As sentiment worsened, the dollar, a favored safe-haven asset during the Middle East conflict, strengthened. Treasuries fell as rising oil prices fueled inflation fears, pushing the 10-year Treasury yield up four basis points to 4.53%. Gold fell 1.9% to $4,370 an ounce, while Bitcoin hit a six-week low.
Previously, President Donald Trump had said he was "not satisfied" with negotiations with Iran, dampening expectations of a near-term breakthrough. Trump also declared that no single country would control the Strait of Hormuz, highlighting one of the key disputes prolonging the conflict, now in its fourth month.
Federal Reserve Vice Chairman Philip Jefferson said he expects inflation to slow by the end of the year as the impact of tariffs and rising energy costs fades, while cautioning that risks remain tilted to the upside. Separately, Fed Chair Lisa Cook said inflation is moving in the wrong direction and indicated she would support higher interest rates if that trend continues.
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