Global oil prices jumped in early trading on Monday (July 20) after the United States announced new attacks on Iranian targets for the ninth night in a row, with Brent crude up 3.8% to $91.42 a barrel.
U.S. benchmark West Texas Intermediate crude also climbed to trade near $84 a barrel, while ING Group commodity analysts Warren Patterson and Eva Manthi reported that tanker movement through the Strait of Hormuz is almost completely halted due to the exchange of strikes and navigational risks.
U.S. Energy Secretary Chris Wright confirmed that the number of ships transiting the Strait of Hormuz has declined as larger tankers pass, while JPMorgan Chase reports that global oil inventories, excluding China, are at their lowest levels, adding to pressure on supply movements.
Tech stocks fall , gold stabilizes
Shares of chipmakers and artificial intelligence companies fell in global financial markets following the unveiling of a new open-source Chinese model called "Kimmy K3" developed by Moonshot AI.
The 10-year Treasury futures fell 7/32, with the money market closing during Asian trading hours on Monday due to a holiday in Japan.
Government bonds in Australia and New Zealand also fell amid fears that higher oil prices would fuel inflation.
Stocks were mixed. Nasdaq 100 futures rose 0.3% after Friday's sell-off, which was partly sparked by a surprise breakthrough by Chinese AI startup Moonshot AI, after it unveiled a model that challenged perceptions of U.S. AI leadership.
The MSCI Asia-Pacific stock index fluctuated between modest gains and losses, while South Korea's Kospi fell 4% as traders returned after Friday's holiday.
The escalation in the Middle East is upsetting markets already shaken by a sell-off in tech stocks, with investors questioning whether the surge in AI spending can support the sector's rapid gains.
Jonas Goldman, chief capital markets expert at Capital Economics, said the war in the Strait of Hormuz could put further pressure on financial markets as technology companies' earnings reports are cast into question. The Philadelphia Semiconductor Stock Exchange index fell, and South Korea's Kospi fell 4 percent.
The jump in energy prices has revived concerns about monetary policy and inflation at central banks.
Gold prices stabilized near $4,010 an ounce, weighed down by rising bond yields and expectations that interest rates will remain high.
European stocks fall
European stocks were slightly lower on Monday, weighed down by rising geopolitical pressures in the Middle East, with the STOXX 600 index falling 0.2% to close at 640.45 points by 07:03 GMT.
Shares of energy companies (.SXEP) was positive, rising 1.4% driven by higher crude oil prices.
The travel and leisure sector (.Ryanair topped the list of losers in the STOXX 600 index with a sharp decline of 4.6%, after announcing a 34% decline in first-quarter profits, directly impacted by higher fuel costs and lower ticket prices.
Technology stocks (.SX8P held slightly higher at 0.4%, as investors awaited earnings results from major U.S. tech companies, which the market expects to boost AI-driven growth momentum.
Traders are looking ahead to the European Central Bank meeting this week, with expectations broadly indicating that the bank will keep interest rates unchanged.
While ASML showed an optimistic outlook last week, investors are cautiously watching the repercussions of the current disputes on industrial input costs, particularly in the chemical sector, which is currently testing the ability of demand to recover amid price volatility.