European markets opened lower and oil prices rose on Monday morning as investors monitored the latest escalation in the Middle East.
Crude oil prices climbed in early trade as Israel launched airstrikes on Monday targeting central and western Iran in response to missile fire. Iranian state television reported the sound of explosions being heard in Isfahan, Tabriz and Tehran, without immediately elaborating.
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American and Iranian negotiators reached a tentative deal last week to extend their ceasefire, but the agreement has not been finalised and the latest attacks further strain efforts to end the conflict.
Iran's attack flurry reportedly prompted US President Donald Trump to call Israeli Prime Minister Benjamin Netanyahu to advise against retaliation, even as Israeli military leaders vowed to strike as soon as they are given the go-ahead.
"I am going to call Bibi right now and tell him not to retaliate," Trump was quoted as saying by Axios journalist Barak Ravid in a phone interview, using the Israeli leader's nickname.
"Israel had its strike and Iran had its strike. We don't need another one," Trump reportedly said.
Brent crude, the international standard, jumped back above $100 a barrel, trading at $100.6 at the time of writing while the benchmark US crude surged 5% to $96.5.
European markets open lower
In other share trading, key European markets opened in the red on Monday morning.
The Euro Stoxx 50 traded flat and the broader pan-European Stoxx 600 dropped around 0.6% in early trading.
Germany's Dax was down 1.19%, France's CAC 40 was also lower, by 0.94%, while the UK's FTSE 100 declined 0.35%. Meanwhile, Italy's FTSE MIB fell by 0.44%.
In Asia-Pacific markets, South Korea's Kospi slipped 8.3% to 7,484 points as Samsung Electronics, the country's biggest company, dropped over 10%. SK Hynix also declined more than 7.5%.
Taiwan's Taiex fell 1.3%. Hong Kong's Hang Seng lost 1.2% and the Shanghai Composite shed 1.7%.
Japan’s benchmark Nikkei 225 dropped roughly 4% as the Japanese government revised the annualised economic growth rate to 1.8% for the first quarter this year, down from an earlier estimate of 2.1%.
Trading was closed in Australia for the King’s Birthday, a holiday.
Wall Street finished last week with the S&P 500 sinking 2.6%, to 7,383.74, after a strong jobs report boosted expectations that the Federal Reserve will raise rates at some point this year.
It was the biggest one-day drop since 10 October, when the Trump administration threatened to impose a 100% tariff on imported goods from China. The Dow Jones Industrial Average fell 1.4% to 50,866.78. The Nasdaq composite slumped 4.2% to 25,709.43.
Bond yields jumped after a report showed the US added a surprising 172,000 jobs in May, according to the Labour Department. It is the latest report showing that employment remains solid, despite the squeeze inflation is putting on businesses and consumers.
The yield on the 10-year Treasury rose to 4.54% from 4.50% just before the report was released. The yield on the 2-year Treasury, which more closely tracks the Fed’s actions, jumped to 4.16% from 4.04% just prior to the report.
The Fed has been holding interest rates steady as it tries to gauge the ongoing impact from rising inflation. Prices were already ticking higher from the impact of tariffs. The US war with Iran has essentially blocked crude oil shipments from moving through the Strait of Hormuz.
In currency trading early Monday, the US dollar inched up to 160.35 Japanese yen from 160.25 yen. The euro cost $1.1530, up from $1.1515.
