Oil Brushes $100 a Barrel, Pushing Treasury Yields Up, U.S. Futures Down

By Dow Jones Newswires Staff

Oil hovered close to $100 a barrel, pushing U.S. futures and global stocks lower and sovereign debt yields higher.

Widening conflict in the Middle East continued to affect markets. Trade through the Strait of Hormuz deteriorated further as Iran laid mines in the shipping route and launched fresh attacks on energy infrastructure.

U.S. 10-year Treasury yields pushed to a five-week high as higher energy prices threatened a sustained uptick in inflation, while the 10-year German Bund yields hit levels not seen since October 2023.

--Oil prices pared some gains as they fell back below $100, but were still up for the session. Brent was up 4.6% to $96.16 a barrel, while WTI rose 3.1% to $86.10 a barrel. The gains came despite the IEA's decision to release a record 400 million barrels of oil from emergency stocks to bring down prices. "As we have said repeatedly, the only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz," analysts at ING said. "Failing to do so means that the market highs are still ahead of us.

European benchmark Dutch TTF natural-gas contracts rose 4.2% to 52.06 euros a megawatt-hour, supported by the prospect of European buyers having to compete for available liquefied-natural-gas cargoes.

--Major U.S. stock indexes were all lower in premarket trade. Futures for the S&P 500 were down 0.6% while the Dow Jones Industrial Average declined 0.7%. The tech-heavy Nasdaq slid 0.5% premarket.

Stock markets are yet to price in the full negative effects of higher energy and fertilizer costs paired with anxiety over private credit quality and artificial-intelligence, Swissquote's Ipek Ozkardeskaya said.

"There is a combination of ugly developments suggesting that market risks remain tilted to the downside."

--Asian equities declined as the Middle East conflict continued to stoke fears of oil-supply disruptions. South Korea's Kospi ended 0.5% lower at 5583.25 and Japan's Nikkei Stock Average was 1.0% lower. Hong Kong's Hang Seng Index closed 0.8% lower.

--European blue-chip indexes fell as oil rose again, though moves were more muted at the opening bell than in the previous session. The U.K.'s FTSE 100 slipped 0.6% as banks and travel stocks fell, while investment bank HSBC slid 3.6%. Luxury stocks dragged the CAC 40 down 0.5% in Paris, while the industrial-heavy German DAX fell 0.4%. Automakers fell after BMW--down 2.2%--warned of lower earnings. Rheinmetall picked up 3.9%. Spain's IBEX 35 fell 0.4% as banks moved lower. In Milan, luxuries also weighed on the FTSE MIB as it slipped 0.2%, though an early surge for Leonardo supported the index. The defense group gained 7.05% after posting earnings.

--The dollar rose as the Middle East conflict sent oil prices higher and encouraged investors to seek safe-haven assets. Higher oil prices benefit the U.S. as a net oil exporter and have reduced expectations for U.S. interest-rate cuts. The DXY dollar index rose 0.2% to 99.381.

Bitcoin fell 1.5% to $69,597.

--The 10-year U.S. Treasury yield hit a five-week high of 4.251% in Asian trade before retreating slightly, but still trading higher on the day, according to Tradeweb data.

The 10-year German Bund yield soared to 2.963% in opening trade. "Any hopes of a quick end to the war appear to be fading," Jefferies' Mohit Kumar said in a note. Italian and Irish government bond auctions will round off this week's bond supply in the eurozone on Thursday.

--Gold prices ticked higher but remain pressured by a firmer dollar and persistent concerns over high energy costs and inflation. Futures in New York rose 0.1% to $5,183.10 a troy ounce, failing to hold above $5,200.

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(END) Dow Jones Newswires

03-12-26 0538ET