Oil Prices Rise Sharply, Stocks Conclude Mixed Trading Session

Global Markets Reel as Iran Tensions Escalate

Oil prices surged nearly 8% on Thursday, while equities markets around the world were mixed in volatile trade as traders weighed conflicting developments and remarks related to the Iran war.

European shares trimmed losses as some major Wall Street indexes and U.S. bond prices clawed back gains on news that Iran was drafting a protocol with Oman to monitor traffic in the Strait of Hormuz. However, world oil prices surged on the back of a prime-time address by U.S. President Donald Trump, who said the U.S. would hit Iran "extremely hard" in the coming weeks and "bring them back to the Stone Ages where they belong." U.S. crude prices soared more than 11% in response.

Market Performance

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On Wall Street, stocks ended mixed in a choppy last trading day of the week ahead of the Good Friday holiday. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, climbed 0.44%. Gold prices fell as the U.S. dollar gained.

Government bond yields jumped on expectations that an inflation spike would force central banks to raise interest rates, or at least keep them on hold. The yield on benchmark U.S. 10-year notes fell 1.6 basis points to 4.305%, while the two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, was flat at 3.803%. Euro zone benchmark Bund yields snapped a three-day decline and traders raised bets for interest-rate hikes.

India's central bank moved to ban trading of so-called non-deliverable forwards in an effort to halt the rupee's run of record lows. The move sent the currency up 2%, although analysts questioned how long the rebound would last. South Korea's Kospi index slid 4.7% in response to the escalating tensions.

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The market is expected to remain cautious in the coming weeks, with some analysts suggesting that the Strait of Hormuz will be a key factor in determining the market's direction. As one strategist noted, "The only thing that really matters is whether the Strait of Hormuz will open soon."