Global Markets Retreat as Oil Nears US$92. Treasury Surge

Global markets extended their retreat on Tuesday as renewed tensions around the Strait of Hormuz pushed crude oil sharply higher and sent US Treasury yields to their highest level in 20 months.

Brent crude approached US$92 a barrel following Iranian strikes involving several tankers, including a Saudi vessel and a South Korean-owned ship. The escalation heightened concerns over energy supplies and revived fears that higher oil prices could prolong inflationary pressures.

The US 10-year Treasury yield climbed to 4.79%, adding pressure to equities by increasing borrowing costs and reducing the attractiveness of risk assets.

Wall Street remained under pressure for a second consecutive session. The Dow Jones fell 0.79% to 52,766.88, while the S&P 500 declined 0.71% to 7,631.47. The Nasdaq Composite dropped 1.03% to 26,099.77, with technology stocks leading the decline for a second straight day.

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European equities also weakened, with the STOXX Europe 600 falling 0.56%. Asian markets were mixed, with Hong Kong’s Hang Seng and Japan’s Nikkei declining, while South Korea’s Kospi managed a modest gain. China’s Shanghai Composite also edged lower.

Investors are now turning to a busy economic calendar, with interest-rate decisions from the Bank of Canada and Reserve Bank of New Zealand due Wednesday, followed by the closely watched US non-farm payrolls report on Friday.

Markets will closely monitor whether the Middle East conflict escalates further. A sustained rise in crude prices could complicate central-bank efforts to contain inflation, while elevated bond yields may continue to weigh on global equity valuations.

Absent further escalation, markets could stabilise, but volatility is likely to remain elevated.

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