Oil Tops $100 After US Orders Hormuz Closure; Global Stocks, Bonds Fall

Japan 10-Year Yield Hits Highest Since 1997

Odds of a US Rate Cut This Year Fall Below 20%

Oil climbed back above $100 a barrel after peace talks between the US and Iran stalled and President Donald Trump ordered the closure of the Strait of Hormuz. Stocks and bonds fell.

In European trading on June 13, Brent futures jumped 7.8% to above $102.64 a barrel as of 10:50 a.m. GMT. In early US trading, West Texas Intermediate rose 8.1% to $104.35 a barrel. Murban crude from the Middle East also gained 6% to above $104 a barrel.

In Asia, Japan’s Nikkei 225 fell 0.7% and South Korea’s Kospi dropped 0.83%. Hong Kong’s Hang Seng Index lost 0.9%, while Taiwan’s Taiex rose 0.1% and China’s Shanghai Composite added 0.06%.

Europe’s Stoxx 600 fell 0.7%.

US stock futures also moved lower. S&P 500 futures fell 0.6%. Nasdaq 100 futures lost 0.7%, while Dow Jones Industrial Average futures slipped 0.5%.

The yield on two-year US Treasuries rose 2 basis points to 3.82%, while the 10-year yield climbed 4 basis points to 4.337% as investors scaled back expectations for US rate cuts this year.

The ICE Dollar Index rose 0.3% to 98.96, its biggest gain in a week. Gold edged lower to around $4,730 an ounce.

Concerns over oil and gas shipments intensified after Trump’s restrictions on ships calling at Iranian ports raised the prospect of a deeper global energy shock. Even so, the relatively modest declines in risk assets across Asia and Europe suggested investors remained cautiously optimistic about the chances for a resolution to the conflict.

With the US earnings season about to begin, investors are watching how risks tied to the Middle East war, artificial intelligence and private credit will affect markets. Goldman Sachs is due to report results before the US market opens on June 13.

“The muted market response to the US blockade aimed at pressuring Iran shows investors are underestimating growth risks,” Francois Dosse, head of equities at Siena Gestion in Paris, said.

In Europe, Hungary’s forint rose to its strongest level in four years on June 13 after Prime Minister Viktor Orban lost Sunday’s general election. Hungarian stocks also hit a record high. The opposition victory could open the door to billions of euros in additional funding from the European Union.

The recent surge in oil prices, combined with faster US consumer-price growth in March, has refocused the US bond market on inflation.

According to CME Group’s FedWatch tool, rate-swap traders now see less than a 20% chance of a US rate cut this year.

Japan’s 10-year government bond yield climbed as high as 2.490% earlier on June 13, the highest since 1997. It later traded around 2.465%.

South Korea’s 10-year government bond yield rose 6 basis points to 3.72% to 3.75% on June 13. The benchmark three-year yield climbed 5 basis points to 3.40% to 3.41%.

Kim Jeong-a, Hankyung.com contributing reporter, kja@hankyung.com