Oil tops $100 as Iran tensions escalate; tech stocks slide on AI spending fears

Oil prices surged above $100 a barrel for the first time since May, as renewed US-Iran hostilities disrupted key shipping routes. Brent crude jumped 6% to $100.50 on Thursday after attacks on tankers in the Red Sea and the near-closure of the Strait of Hormuz, according to CNA. The Houthis struck two Saudi oil tankers, and the US launched a 12th night of strikes on Iran, prompting further retaliation Source: CNA.

Stock and bond markets

Wall Street fell sharply as major tech companies reported disappointing cash flows. Alphabet and Tesla—the first of the 'Magnificent Seven' to report—burned through cash due to heavy AI spending. Tesla shares tumbled 12%, while Alphabet fell about 7% Source: CNA. The Dow lost 1%, the S&P 500 fell 1%, and the Nasdaq slid 1.9% Source: CNA. Meanwhile, the 10-year US Treasury yield reached 4.71%, its highest since January 2025, as rising oil prices stoked inflation fears and shifted expectations for Federal Reserve rate hikes Source: CNN. Markets now price in a 36% chance of a rate hike at the next Fed meeting Source: CNN.

Global ripple effects

European borrowing costs also rose, with Germany's 10-year Bund yield above 3.2% for the first time since 2011 Source: CNA. The European Central Bank held rates steady but warned of inflationary impacts from the energy shock Source: CNA. In Asia, Japan's yen languished near a 40-year low despite verbal intervention, while the dollar strengthened on safe-haven demand Source: CNA. Norway's Equinor reported doubled profits to $11.5bn, benefiting from higher oil prices and increased production Source: Guardian.

What's next

Analysts warn that prolonged conflict could push oil to $150 a barrel, and central banks may be forced to tighten further, threatening economic growth.