Global financial markets fell sharply on Monday after US President Donald Trump ordered a blockade of the Strait of Hormuz, escalating tensions with Iran following the collapse of weekend peace talks.
The move triggered a surge in global oil prices, with Brent crude jumping 7.4% to just above $102 a barrel as traders priced in the risk of severe disruptions to energy flows through one of the world’s most critical shipping routes.
The Strait of Hormuz is a key transit corridor for global oil exports, and concerns over its stability immediately rippled through equities, bonds, and currency markets.
Asian stock markets fell 1.1%, while futures tied to the S&P 500 dropped 0.7% as investors reacted to rising energy costs and the potential drag on global economic growth. European equities were also expected to open lower, with futures indicating a 1.4% decline.
Despite the broader selloff, some technology stocks, including Taiwan-based MediaTek Inc., showed resilience, supported by strong underlying sales performance.
In currency markets, the US dollar strengthened against all major Group-of-10 peers, continuing its role as a safe-haven asset amid geopolitical uncertainty.
Bond markets also came under pressure. US Treasury prices declined, while Japan’s 10-year government bond yield climbed to 2.49%, its highest level since 1997, reflecting expectations that higher energy prices could fuel inflation and force tighter monetary policy.
The latest market volatility follows a period of strong performance, with global equities recently posting their biggest weekly gains in more than two years and oil recording its steepest weekly decline since 2022. However, analysts say renewed geopolitical risks have quickly reversed sentiment.
While markets reacted negatively, trading remained relatively orderly, suggesting some investors still believe a diplomatic resolution to the crisis may be possible, which could limit long-term economic damage.
The developments underscore growing uncertainty in global markets as geopolitical tensions increasingly intersect with inflation expectations, energy security, and central bank policy outlooks.
