Tensions in the Middle East have driven up international oil prices, causing global financial markets to shake. Concerns that rising oil prices could increase inflationary pressures and complicate interest rate cuts in major economies led to simultaneous declines in stock and bond prices.
According to the International Financial Center, on September 1 (local time), Brent crude surged 4.60% to $94.65 per barrel. Ongoing military clashes between the U.S. and Iran have raised fears of disruptions to oil supply through the Strait of Hormuz.
The spike in oil prices immediately impacted the bond market. The yield on the U.S. 10-year Treasury rose by 5 basis points to 4.80%. The yield on the UK 10-year bond jumped 16 basis points to 5.22%, the highest level since 2008, while Japan's 10-year yield surpassed 3% for the first time in 30 years. In Japan, rising inflationary pressures and concerns over fiscal deterioration have strengthened expectations for interest rate hikes this month.
As interest rate burdens increased, investor sentiment towards risk assets weakened. The U.S. S&P 500 index fell by 0.71%, and the European Stoxx 600 index dropped by 0.56%. The volatility index (VIX), which reflects market anxiety, rose by 9.52%. The dollar index increased by 0.24% amid a preference for safe-haven assets.
U.S. economic indicators have added to the uncertainty surrounding monetary policy. July job openings and the August manufacturing Purchasing Managers' Index (PMI) fell short of market expectations or showed a slowdown from the previous month, although input prices in manufacturing remained high. While economic momentum is weakening, rising oil prices are exacerbating inflationary pressures.
The International Financial Center stated, "The sustainability of the AI investment boom that has supported the U.S. stock market despite high Treasury yields will be crucial. If the geopolitical situation in the Middle East and rising oil prices persist, the burden on corporate financing could increase, leading to continued weakness in both the stock and bond markets."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.