Increased targeting of oil and gas infrastructure in the Iran war is hitting trader sentiment hard as concerns mount that the current energy crisis is going to have a lasting impact on the global economy.
Oil prices jumped again on Thursday as the war with Iran tightened its grip on the global economy, sending stock markets worldwide lower.
ADVERTISEMENT
ADVERTISEMENT
Brent crude, the international benchmark, briefly rose above $119 a barrel before easing back to $110.80, still a 3.2% increase from the previous day. US crude added 0.7% to $96.09 after Iran intensified attacks on oil and gas facilities in the Gulf in retaliation for an Israeli strike on a major Iranian gas field.
The strikes stoked fears that Gulf oil and gas production could be disrupted for months, keeping prices high and adding to global inflation pressures.
Stock indices tumbled across the US, Asia and Europe, with Germany and the UK shedding 2.5% and the CAC 40 in Paris being down by 1.9% at around 15:30 CET.
Earlier on Thursday, both the European Central Bank and the Bank of England held key interest rates, signalling that inflation projections may need revising amid surging energy prices.
Compared to the European bloodbath, Wall Street’s losses were more modest, with companies less reliant on Gulf oil.
The S&P 500 dropped 0.4% and is on track for a fourth consecutive losing week, its longest streak in a year. The Dow Jones was down 188 points (0.4%) and the Nasdaq 0.6% lower.
Traders are increasingly worried about oil-driven inflation, even factoring in a slim chance the Federal Reserve may need to hike rates this year. Just a month ago, markets were pricing in multiple cuts. The Fed’s decision on Wednesday to hold rates and Chair Jerome Powell’s cautious comments on cuts in 2026 reinforced a more cautious outlook.
Market pricing now suggests roughly an 80% chance the Fed will hold rates, with a near 5% chance of a hike by year-end. Treasury yields rose: the two-year yield touched 3.81%, its highest since the summer, while the 10-year held at 4.26%, up from 3.97% before the war began.
Economic reports also supported higher yields. US unemployment claims fell unexpectedly, and manufacturing growth in the mid-Atlantic region accelerated. Rising yields are pushing up mortgage and loan costs while weighing on a wide range of investments, from equities to crypto to gold.
Gold fell 6.6% to $4,575.60 per ounce, silver dropped 11.9%, and mining stocks plunged: Newmont down 6.7%, Freeport-McMoRan 6.1%. Micron Technology fell 4.1%, despite reporting a record quarter, erasing some of its 62% gain this year driven by a global memory shortage.
Tech and green stocks helped cushion losses. Rivian Automotive surged 8.5% after announcing a partnership with Uber, which will invest up to $1.25 billion and buy 10,000 autonomous robotaxis. Uber rose 0.2%.
