The S&P 500 Index is down 0.88% today, reaching a 3.75-month low, while the Dow Jones Industrial Average is down 0.59% and at a 5-month low. The Nasdaq 100 Index falls 1.22%. These declines come amid heightened concerns over inflation and economic growth due to elevated energy costs resulting from the ongoing war in Iran. The situation has led to surging bond yields, with the 10-year T-note reaching 4.38%, the highest in 7.5 months.
The conflict in Iran, now in its twenty-first day, exacerbated market pressures as Kuwait reported strikes at its Al Ahmadi refinery, and Bahrain faced warehouse fires. U.S. plans to consider taking over Iran’s Kharg Island to alleviate pressure in the Strait of Hormuz further dampened investor sentiment. Global oil supply disruptions are estimated to be cutting production by 8 million barrels per day this month, with Goldman Sachs warning that crude prices could exceed $150 a barrel if the situation persists.
In economic indicators, the latest data shows the Euro Stoxx 50 down 1.22% and China’s Shanghai Composite falling to a 2.5-month low. European government bond yields have also spiked, with Germany and the UK seeing their yields at 14.75 and 17.5-year highs, respectively. The probability of a 25 basis point rate hike by the ECB at its next meeting is currently at 79%.
