Oil prices rose in early European trade after the U.S. and Iran exchanged a fresh round of tit-for-tat strikes, threatening to undo a fragile peace agreement.
The U.S. also revoked a waiver allowing Tehran to legally sell oil as American forces struck sites along Iran's coast in response to Iranian attacks on commercial vessels in the Strait of Hormuz.
The escalation further damped equity market sentiment, with U.S. stocks mostly poised to follow most Asian and European stocks lower at the open. U.S. technology stock futures were flat, even as concern around the memory cycle pushed South Korea's Kospi into a bear market.
Higher oil prices helped drag U.S. and European sovereign debt, though the dollar was steady as investors watch for the release of minutes from the Federal Reserve's last rate-setting meeting later Wednesday. Also on investors' watch list, world leaders will discuss Iran and increased European defense spending over the second day of a North Atlantic Treaty Organization summit in Ankara.
--Brent rose 3% to $76.40 a barrel, while WTI futures were up 2.9% to $72.50 a barrel in early European trading. The fresh round of attacks, which mark the most significant escalation since the U.S. and Iran signed an interim deal on June 17, came after the Islamic Revolutionary Guard Corps fired missiles and drones at ships near the Strait of Hormuz on Tuesday. "Re-escalation in the Persian Gulf has reignited supply concerns," analysts at ING said. "The curve structure also strengthened, with the front end returning to backwardation after recently flipping into contango amid the ramp-up of Persian Gulf supply." Backwardation occurs when futures with near-term deliveries are marketed at a premium over longer-dated contracts.
--In the U.S., futures for the S&P 500 fell 0.2% while the Dow Jones Industrial Average decreased 0.4%. Nasdaq futures were flat.
--In Asia, South Korea's Kospi fell 5.35%, slipping into a technical bear market with the index down 23% from its June peak. Memory chip manufacturers Samsung Electronics and SK Hynix extended recent losses, closing down 6.25% and 5.7%, respectively. In Hong Kong, Alibaba Group shares rose 12% alongside broader advances by the tech sector, with the Hang Seng Tech Index rising 5.2%. The broader Hang Seng index rose 3%. The entire Chinese internet sector is gaining, likely due to portfolio rebalancing from the outperforming AI hardware sectors into laggard segments, said Jialong Shi at Nomura. Elsewhere, Japan's Nikkei 225 index lowered 2.1%, while China's benchmark Shanghai Composite fell 0.5%.
-- European indexes all fell in early trade. Banks and energy-intensive industries slid as the Europe-wide Stoxx 600 dropped 0.7%. Germany's DAX was down 1.1%. Deutsche Bank drops 2.5%, while autos in the index faltered, with Mercedes-Benz group down 2.2%. In Paris, the CAC 40 was 0.8% lower with Renault 2.4% lower while bank Societe Generale slid 2.3%. Losses for London's FTSE 100--down 0.8%--were cushioned by gains for oil majors BP and Shell, as miners led the index's fallers. Banks dragged on Spain's IBEX 35 and the Italian FTSE MIB, which slipped 1% and 0.6%, respectively. Dutch AEX edged down 0.1% as ASML nudged up 0.3% after dropping sharply in the last session.
--The dollar traded steady ahead of the release of the Fed's meeting minutes for June at 1800 GMT. Kevin Warsh's first meeting as Fed Chair had prompted markets to price in more interest rate rises due to his commitment to price stability and projections signaling a chance of tightening. However, Warsh explicitly avoided policy guidance so it seems unlikely he would permit such guidance via the minutes, Standard Chartered's Steve Englander said in a note. "Avoiding any discussion of rate hikes may come to be seen by the market as a reluctance to move." The DXY dollar index traded flat at 101.017, having briefly reached a near one-week high of 101.215 overnight on safe-haven flows.
--U.S. Treasury yields rose in Asian trade with the 10-year yield hitting a four-week high of 4.565%.
--Eurozone government bond yields rose in opening trade, with the 10-year Bund yield hitting a four-week high of 3.032%, according to LSEG data. Rising eurozone bond yields follow their U.S. peers, with the 10-year Treasury yield also hitting a four-week high of 4.565% in Asian trade. Yields rose as the U.S.-Iran ceasefire came under renewed pressure, causing oil prices to move higher.
--Bitcoin dropped 1.8% to $62,514.
--European natural-gas prices climbed above 48 euros a megawatt-hour as the latest escalation between the U.S. and Iran heightened concerns over fuel supplies ahead of Europe's heating season. In early trading, the benchmark Dutch TTF contract rose 2.9% to 48.12 euros a megawatt-hour, up more than 10% on the week. "The European gas market continues to look tight as we move through the injection season," Ewa Manthey and Warren Patterson from ING said. Storage across the European Union is currently 50% full, well below the five-year average of 66%.
--Gold prices edged lower but have so far found support above $4,100 a troy ounce as investors await the release of Fed meeting minutes for more cues on the monetary policy outlook. "The metal continues to trade largely in line with shifting US rate expectations," ING analysts said. Meanwhile, continued gold purchases by China's central bank, alongside ongoing reserve diversification by central banks globally, also provided underlying support for bullion. In early trading, New York futures fell 0.5% to $4,135.50 an ounce but are up more than 2% on the week.
Write to Barcelona Editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
July 08, 2026 04:14 ET (08:14 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments