Brent crude oil prices jumped more than 5% on Tuesday, reaching a daily high of $79.26 a barrel, after the United States and Iran traded fresh military strikes near the Strait of Hormuz. US President Donald Trump declared that the shaky ceasefire with Iran was “over”, sparking a broad sell-off in global stock markets and pushing government bond yields higher on inflation fears.
European indices fell sharply, with London’s FTSE 100 dropping 1% to 10,556, Germany’s Dax losing 1.6%, and Spain’s Ibex sliding 2%. In Asia, Japan’s Nikkei closed 2.1% lower, China’s CSI 300 fell 0.77%, and South Korea’s Kospi tumbled 5.5%, hit by a sell-off in semiconductor shares. Wall Street also opened lower, with the S&P 500 down nearly 0.5% and the Dow Jones slipping 0.9%.
Eurozone government bond yields rose to their highest levels in almost a month. Germany’s 10-year bond yield climbed 5 basis points to 3.034%, while the two-year yield, which is more sensitive to European Central Bank rate expectations, rose to 2.637%. UK gilt yields also surged, with the 10-year bond rising 9 basis points to 4.94%.
Energy stocks such as BP, Shell, and British Gas parent Centrica led gains on the FTSE 100, while travel and technology shares fell. Matthew Ryan, head of market strategy at Ebury, said the key question is whether this marks a complete breakdown in negotiations or a temporary setback.
Separately, the Dutch prosecutor’s office announced it is taking legal action against Tata Steel’s Dutch subsidiary, accusing it of deliberately releasing harmful substances into the environment. The steelmaker said it takes the concerns seriously and continues to take improvement measures, but acknowledged that some emissions are “technically inevitable”.
