Brent Crude Surges Above $111 As Bond Yields Jump

Brent crude climbed back above $111 a barrel on Monday after fresh drone attacks in the Gulf raised concerns over energy supplies and shipping through the Strait of Hormuz. The S&P 500 and Nasdaq ended sharply lower on Friday as Treasury yields rose to their highest levels since early 2025, with Nvidia, AMD and Intel all retreating heavily. The FTSE 100 also fell steeply, while sterling eased to $1.332 against the dollar and the yen weakened towards 159 per dollar, keeping intervention concerns in focus. Microsoft rose after Pershing Square disclosed a new stake, while Hiscox rallied in London on takeover speculation.

Equities

The FTSE 100 closed 1.7% lower on Friday at 10,195.37, marking its sharpest one-day fall in more than eight weeks and extending its losing streak to a fourth consecutive week. The FTSE 250 also finished lower, down 1%, as investors reacted to rising UK borrowing costs, weaker sterling and renewed political uncertainty surrounding Prime Minister Keir Starmer after Greater Manchester Mayor Andy Burnham positioned himself for a potential leadership challenge.

British government bond yields climbed to their highest level since 1998 on Friday, while the pound fell 0.5% against the US dollar. Oil prices also moved higher after renewed tensions between the United States and Iran raised concerns about disruption in the Strait of Hormuz. Brent crude gained more than 2% during the session.

Hiscox closed 12.3% higher in London trading on Friday after reports that Canada’s Intact Financial was considering a takeover bid for the insurer. Utilities shares came under heavy pressure, with the sector falling 7.5%, while precious metal miners dropped 7.7% as gold and silver prices retreated sharply.

In the US, the S&P 500 closed 1.24% lower on Friday at 7,408.50, although the index still secured a seventh straight weekly gain. The Dow Jones Industrial Average lost 1.07%, while the Nasdaq Composite fell 1.54% and posted its first weekly decline in seven weeks.

Technology stocks led the sell-off late on Friday, with the Philadelphia Semiconductor Index dropping 4%. Nvidia closed 4.4% lower, AMD fell 5.7% and Intel declined 6.2% as investors reduced exposure to artificial intelligence-linked shares following a sharp rise in Treasury yields.

Microsoft bucked the broader market weakness and closed 3.1% higher on Friday after Bill Ackman’s Pershing Square disclosed a new investment in the company. Medical device maker Dexcom gained 6.6% after announcing plans to appoint two independent directors and restructure a board committee in cooperation with activist investor Elliott Investment Management.

Ford shares fell 7.5% by the close on Friday, giving back part of the strong gains recorded earlier in the week following optimism around the company’s energy storage business.

Forex & Commodities

The US dollar held firm early on Monday as rising oil prices and higher bond yields continued to support demand for the currency. The dollar index traded at 99.33, while the euro slipped to $1.162 and sterling edged lower to $1.332 against the US currency.

The Japanese yen weakened to 158.97 per dollar on Monday morning, its softest level since late April, keeping traders alert for potential intervention from Japanese authorities. The offshore Chinese yuan also fell, trading at 6.815 per dollar after weaker Chinese economic data added to concerns over slowing growth.

Bond markets remained under pressure on Monday, with the yield on the benchmark 10-year US Treasury note rising to 4.631, close to its highest level since February 2025. Two-year Treasury yields also climbed to 4.102 as investors increased expectations for another Federal Reserve interest rate rise before the end of the year.

Markets are now pricing in a better than 50% chance of a US rate increase by December ahead of the release of Federal Reserve meeting minutes later this week. Investors are also awaiting fresh US purchasing managers’ index data for further signals on inflation and economic activity.

Oil prices extended last week’s rally early on Monday after renewed attacks in the Middle East raised concerns over energy supply disruption. Brent crude rose to $111.3 a barrel after touching its highest level since early May, while US West Texas Intermediate crude climbed to $107.8.

The latest gains followed reports of a drone strike on the Barakah nuclear power plant in the United Arab Emirates and further drone interceptions by Saudi Arabia. Donald Trump is also expected to meet US national security advisers on Tuesday to discuss possible military action involving Iran.

Spot gold steadied at $4,540 per ounce on Monday morning after earlier falling to its lowest level since March 30. Silver traded lower at $75.38 per ounce, while platinum slipped to $1,972 and palladium declined to $1,395.