Oil prices surged over 5% following Donald Trump's declaration that the ceasefire with Iran is "over" amidst new US strikes. On Friday, Brent crude rose to $77.86 a barrel, reflecting heightened tensions in the region. This spike in oil prices contributed to declines in stock markets and rising government bond yields.
Impact on Global Stock Markets
The announcement from Trump had immediate repercussions on global stock markets. The UK's FTSE 100 dropped by 1%, equating to 110 points, closing at 10,556. In Europe, Germany’s Dax fell 1.6%, and Spain’s Ibex lost 2%. Across the Atlantic, the S&P 500 index decreased nearly 0.5%, the Dow Jones slid 0.9%, and the Nasdaq fell 0.3%.
In Asia, the situation was similar, with Japan’s Nikkei ending the day down 2.1%, while China’s CSI 300 declined 0.77% and South Korea’s Kospi tumbled 5.5%, largely due to a sell-off in semiconductor shares.
Government Bond Yields on the Rise
As oil prices climbed, government bond yields in the Eurozone reached their highest levels in nearly a month, intensifying inflation fears. The yield on Germany’s 10-year bond increased by 5 basis points to 3.034%, the highest since July 11. Similarly, the two-year bond yield rose by 5bps to 2.637%, marking the highest level since June 22.
