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Global stocks fell on Monday after oil jumped on a stalemate in US-Iranian negotiations, handing investors a rough start to a week already crowded with economic risks. The dollar, meanwhile, was heading for its strongest monthly showing since June, a sign that money has kept flowing toward safer assets as the standoff drags on.
The trigger came over the weekend. President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz, the narrow waterway that carries a large share of the world’s oil, saying Tehran was desperate to strike a deal. Trump said talks would carry on through this week, but there is no sign yet that Iran plans to soften its position. That combination, continued negotiations with no visible movement, was enough to push crude sharply higher when trading resumed.
Brent futures rose as much as 3 percent to $107.16 a barrel. That extends a month of steep gains, with Brent now up nearly 20 percent in September and roughly 50 percent above where it traded before the conflict began in late February. Refined fuels have climbed even faster. A shortage of refining capacity has pushed diesel to record highs, which matters beyond the pump because diesel underpins trucking, farming and shipping costs. Economists worry that when fuel stays this expensive for this long, higher prices start to seep into wages and everyday pricing decisions, making inflation harder to unwind even if crude eventually retreats.
Government bonds sold off alongside equities, which is the more uncomfortable pairing for investors. The 30-year US Treasury yield climbed about 2 basis points to 5.517 percent, close to its highest level since 2004. Rising yields raise borrowing costs for companies and households and make stocks look less attractive by comparison, so when bonds and shares fall together, there is little safe ground to stand on. Bloomberg’s market coverage described the moves as a dent in the optimism that had lifted markets late last week.
That optimism had been real, if fragile. On Friday, stocks edged higher and the S&P 500 was on track for a weekly gain despite a dramatic run-up in bond yields, helped by hopes of progress in the Middle East that pulled oil lower. The mood held even though meetings between American and Chinese leaders produced no trade breakthrough. Monday’s reversal shows how quickly those hopes can unwind when the diplomacy stalls.
The week’s earlier action offers a preview of what could come next. On Thursday, uncertainty over the Iran conflict sent Brent back above $100 and dragged on tech shares, with chipmakers such as Nvidia, Broadcom and Micron each slipping more than 1 percent. Oracle fell 5.5 percent after a report that it had sent a force majeure notice to a New Mexico data center, and Blue Owl, the project’s developer, dropped about 5 percent. A possible ban on US diesel exports added to the caution, since it would tighten global fuel supplies further.
For investors, the picture is a market pulled by two forces at once. Oil and Iran headlines are moving prices from hour to hour, while the bigger backdrop is central banks that are still worried about inflation. The Federal Reserve raised rates this month for the first time in three years, and stubborn energy costs make it harder for policymakers to argue that price pressures are fading. A strong dollar adds another layer, tightening financial conditions abroad and pressuring emerging market currencies.
The next few sessions should show whether Trump’s promise of continued talks leads anywhere. A credible path to reopening the Strait of Hormuz would likely ease oil and yields quickly and give stocks room to recover. Another week of deadlock would leave crude near current levels, and with it the pressure on both bonds and shares. As with any market snapshot, this is general information rather than investment advice.
