World stocks gain, oil climbs amid new Gulf proposals
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Global stock markets made gains on Monday as investors were focused on developments in the Middle East conflict at the start of a week packed with earnings and economic data. The Japanese yen suddenly jumped in Asian trading, with the dollar falling sharply before paring some of the losses. Traders are on alert for intervention after Tokyo stepped into the market to shore up the currency last week. Iran's military warned U.S. forces on Monday not to enter the Strait of Hormuz after President Donald Trump said the U.S. would start helping to free ships stranded in the Gulf by the U.S.-Israeli war on Iran. Trump provided few details of the plan to aid ships, while the U.S. Central Command said it would support the effort with 15,000 military personnel, more than 100 land- and sea-based aircraft, along with warships and drones. A report from Axios later claimed the U.S. Navy would not necessarily escort ships through the strait. Against this backdrop, Brent crude futures surged over $2.50 to $110.73 per barrel, having recovered from an initial decline during Asian trading hours, while U.S. crude also climbed more than 2% to $104.18. Dealers noted a bulk carrier had reported being attacked by multiple small craft while transiting past Sirik in Iran on Sunday, though it was not clear how many ships would try to run through the Strait of Hormuz even with Navy protection. "The market is being pulled in two opposing directions right now: on one hand, geopolitical risk is pushing oil higher and reviving inflation fears, but on the other, underlying growth especially in the U.S., is clearly softening," said Bruno Schneller, managing partner at Erlen Capital Management, a multi-family office. This combination was driving some of the big market swings recorded in stocks, bonds and currencies, he added. MSCI's broadest index of global shares outside Japan rose, led by tech-heavy South Korean stocks which returned from a holiday with a jump of over 5%. Hong Kong's Hang Seng index gained 1.2%. In Europe, German carmakers dampened the region's start to the week after Trump said on Friday that Washington would raise tariffs on European cars and trucks. The pan-European STOXX 600 declined by 0.3% to 609.64 points after posting a modest gain last week. Most regional bourses were muted while Germany's DAX rose 0.2%. Trading in Europe was subdued; markets in London were closed for a public holiday.
CENTRAL BANKS WARN OF INFLATION RISKS
As another earnings-heavy week gets underway, concerns remained about the scale of artificial intelligence capex investment, now at $751 billion for 2026, $80 billion above estimates at the start of the earnings season and 83% above 2025 spending.
Companies reporting this week include Advanced Micro Devices , Super Micro Computer, Palantir, Walt Disney and McDonald's.
The threat of oil-driven inflation also lifted bond yields in a challenge to equity valuations, while several major central banks had turned hawkish on policy.
Market participants no longer expect the U.S. Federal Reserve to lower rates this year and have priced in interest-rate hikes from the European Central Bank and Bank of England .
Barclays on Monday joined a growing list of brokerages to bet on no policy easing from the Fed this year.
Data this week, including Friday's keyApril payrolls report, could potentially shift the Fed outlook.
YEN WATCH
In global forex markets, the yen remained in the spotlight with traders on edge over potential Japanese intervention to boost the currency.
The dollar was recently flat at 156.93 yen, having fallen to as low as 155.7 yen earlier, as traders smarted from last week's Japanese intervention, which analysts thought could have amounted to around $35 billion.
"But fundamentals remain in favour of USD/JPY, meaning USD/JPY will sooner or later recover and force the MoF’s hand again," said Carol Kong, a currency strategist at the Commonwealth Bank of Australia, who added that given the size of Monday's moves, she doubted Japan had interfered.
She attributed the turbulence to choppy trading in holiday-thinned markets.
The euro was steady at around $1.17, while sterling inched lower to $1.3560.
In commodity markets, gold ticked lower to $4,578 an ounce . (Reporting by Nell Mackenzie and Wayne Cole; Additional reporting by Ankur Bangerjee in Singapore; Editing by Thomas Derpinghaus, Dhara Ranasinghe and)
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