Markets Briefing: Oil Jumps and Stocks Slide as US-Iran Strikes Revive Hike Bets
Fresh US strikes on Iran over the weekend pushed oil sharply higher and set equities on the back foot at the start of a pivotal inflation and earnings week (BBG). Washington said it hit hundreds of Iranian targets over three nights, while Tehran extended its retaliation to Qatar and the UAE for the first time in months and declared the Strait of Hormuz closed (Nikkei). Crude futures rose 4.33% while S&P 500 and Nasdaq futures fell 0.55% and 1.33%. "We are expecting July to be a choppy month for equities, particularly due to inflation, rate-hike worries," said Julia Wang of Nomura, who still expects a solid, tech-led earnings season (BBG).
Asia traded heavily. The KOSPI plunged 7.95%, briefly triggering a circuit breaker, as SK Hynix slumped after its US trading debut and Samsung extended its post-results slide (BBG).
Nikkei futures dropped 2.64% under the twin weight of the chip selloff and oil-driven cost concerns, and the CSI 300 lost 1.38%, while the Hang Seng was the rare gainer at 0.11%. Volatility rose on both sides of the Atlantic, the VIX up 0.6 point to 17.55 and VSTOXX futures 0.55 point higher at 17.80. India's Nifty 50 slipped 0.28%.
Regarding central banks’ implied rate hikes, swaps now put a September Fed hike close to certain, up from roughly a two-in-three chance a week ago, with this week's inflation prints the last before the July meeting (BBG). The Wall Street Journal's new survey shows economists still overwhelmingly expecting a hold through December, with only a small minority calling a hike probable, even as the panel raised its inflation path and cut recession odds to the lowest in over a year (WSJ). Goldman Sachs likewise holds a no-hike view against market pricing (Yahoo).
Regarding inflation, structural forces lean the same way: an EY-Parthenon study puts the cost of cutting Western reliance on China at roughly 23 trillion dollars over a generation and sees decoupling keeping prices in critical sectors persistently higher (FT), a trend that Japanese small businesses quietly exiting China underscore (Nikkei).
In FX, the dollar was the haven of choice, strengthening against all of its Group-of-Ten peers (BBG). The Dollar Index rose 0.10% to 101.067, the yen slipped 0.17% to 161.978 per dollar, and the franc weakened 0.21%, an unusual underperformance for a haven that points to the rate channel dominating. The won lost 0.43% alongside the Kospi rout, and the rupee, an oil-importing currency, fell 0.40%.
Rates sold off across the curve. The 10-year Treasury yield rose 2.4 basis points to 4.585%, with the front end leading as the two-year reached its highest level since early 2025 (BBG). The 10-year JGB climbed 6.7 basis points to 2.773%, the sharpest move among the majors, and the Australian 10-year added 0.6 basis point to 4.866%, while Bund futures slipped 0.22%. Japan's bond auction calendar resumes later this week against that backdrop.
Commodities were split along the stagflation line. Crude led, up 4.33% to 74.50 on the contested Strait (CNBC), while natural gas fell 1.26%. Non-yielding metals bore the brunt of the dollar's strength: gold lost 1.38%, silver dropped 2.46%, and copper fell 1.08% as traders weighed the risk of a hike against demand (BBG). Bitcoin declined 1.49% to 62,792, breaking below a long-term moving average that chartists associate with drawn-out bear phases, and erasing the tone set by the first positive weekly inflow into US spot ETFs in over two months (BBG).
The overnight data run was light but constructive. New Zealand's services PSI returned to expansion at 50.6 in June from 48.0 in May, the first above-breakeven reading since January, though employment remained the weakest component and BusinessNZ called the recovery tentative (Org).
On the corporate tape, SK Hynix's Seoul slump after its heavily oversubscribed US listing was compounded by a local broker's below-consensus profit projection tied to slower HBM price rises (BBG). Nippon Paint has made multiple offers for Akzo Nobel's decorative paints business, and Regis Resources declined to counter Genesis Minerals' bid for Vault Minerals (BBG). Tokyo's push to steer the GPIF deeper into alternative investments extends the pension-reform theme running under Japanese assets (Nikkei). Although Reuters sources said that Japan currently has no plan to change the GPIF's target asset allocation and that it can work within existing ranges to direct more investments to domestic assets.
Monday is light on data, with the week's main event and a run of central-bank speakers filling the evening. The Swiss National Bank's weekly sight deposits will be released at 10:00 CET, watched as the market's proxy for franc intervention after three straight weekly increases. India's June CPI at 12:30 CET is the one tier-1 data print, with consensus looking for headline inflation to firm to 4.3% year on year from 3.93%. Also, the Fed’s Bowman and Waller, the ECB's Schnabel and Nagel, and the BoE's Pill will speak. You can find the full report here.
Looking further ahead, everything routes through Tuesday: US June CPI, where consensus sees the annual rate easing while core stays firm, lands alongside the start of big-bank earnings from JPMorgan, Bank of America, Goldman Sachs, Wells Fargo and Citigroup, and Fed Chair Warsh gives his first congressional testimony this week (LS). The UK's May GDP on Thursday is expected to show the economy still flatlining after the war's energy squeeze (Yahoo).
Time Stamp: 2026-07-13 Time 07:17:00 CET