Wall Street’s tech-heavy Nasdaq Composite fell as did the broad S&P 500 as shares in US chipmakers tumbled. European stock markets were little changed.
“The roller-coaster ride continues, both with respect to the US-Iran conflict and the semiconductor trade,” said Briefing.com analyst Patrick O’Hare.
“Each is on a downhill swing today, which isn’t a comfortable situation for the stock market,” he added.
US President Donald Trump said the United States would reinstall its naval blockade of Iranian ports and would take over the Strait of Hormuz.
Trump said the US would charge a 20 per cent rate on all cargo shipped through the strait, through which a fifth of the world’s oil and liquefied natural gas transited before the war.
Iran’s military warned that it would not allow the United States to “interfere” in the management of the strait of Hormuz as hostilities resumed.
The United States struck Iran for the second day Monday, prompting Tehran to retaliate against US allies in the Gulf, as the two sides battle over the status of the strategic waterway.
Brent North Sea crude, the international benchmark, rallied as much as five per cent Monday, before paring gains to trade just under US$80 a barrel.
The main US contract, West Texas Intermediate, also spiked around 5 per cent.
“While (oil) prices are still not at crisis levels, the creep upwards will ignite fresh inflationary worries and concerns about how far higher interest rates could move,” noted Susannah Streeter, chief investment strategist at Wealth Club.
“That’s being reflected in the bond markets, with yields on gilts and US Treasuries rising,” she added.
Higher interest rates could fuel equity volatility, Briefing.com’s O’Hare warned.
“The higher rates go, the more turbulent the turns will get, but if they come down, so will the market’s anxiety level,” he said.
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