Brent Jumps as Strait of Hormuz Tensions Escalate

Brent crude surged sharply toward recent highs as tanker disruptions in the Strait of Hormuz rattled energy markets. Asian equities fell, with airlines and banks leading losses, while European and US stock futures pointed lower. The dollar edged up against the euro and yen but slipped versus the Swiss franc, and Treasury yields reversed early declines. The Norwegian krone saw limited traction despite the oil rally.

Equities

The FTSE 100 closed 0.6% higher on Friday at a record 10,910.55, marking its third straight all-time closing high. The index rose 6.7% over February, extending its monthly winning streak. Gains were driven by heavyweight miners and defensive shares, while the FTSE 250 added 0.2%.

Among individual stocks, Barclays closed 4.2% lower on Friday after reports that it faces potential losses linked to the collapse of UK mortgage lender Market Financial Solutions, which has gone into administration. Jefferies fell 10% in the US on the same concerns. IAG dropped 7.5% after the airline group declined to provide profit guidance for the year and warned about the risk of higher fuel costs. Recruiter Hays slid 10% after announcing the departure of chief executive Dirk Hahn and cutting its dividend by 84%. In contrast, AstraZeneca rose 2.9% and Unilever gained 2%, providing defensive support. Rightmove climbed after reporting a profit beat and unveiling a £90 million share buyback.

In the US, Wall Street ended February on a weaker footing. On Friday, the Dow Jones Industrial Average fell 1.05%, the S&P 500 lost 0.43% and the Nasdaq dropped 0.92%. Financial and technology stocks led the declines. Nvidia fell 4.2%, extending the previous session’s losses despite posting solid earnings, reflecting caution around AI-related spending. Zscaler plunged 12.2% after reporting a wider quarterly net loss.

There were also sharp gains. Dell jumped 21.9% after saying it expects strong revenue growth from AI-optimised servers by fiscal 2027 and pledged higher shareholder returns. Block surged 16.8% after announcing plans to cut around 4,000 jobs as it increases its use of artificial intelligence. Netflix rose 13.8% after ending its pursuit of Warner Bros Discovery, which fell 2.2%, while Paramount Skydance soared 20.8%.

Early on Monday, US index futures pointed sharply lower, with Dow futures down 1.39%, S&P 500 futures off 1.46% and Nasdaq futures falling 1.86% as conflict in the Middle East intensified.

Forex & Commodities

Heightened conflict in the Middle East has driven sharp moves across currencies, commodities and equities at the start of the week. Early on Monday, Brent crude traded at 77.57 dollars a barrel after briefly touching 82.00 dollars, while US crude stood at 71.17 dollars. The surge followed US and Israeli strikes on Iran and reports of tanker disruptions near the Strait of Hormuz. Spot gold rose to 5,376 dollars an ounce, holding near a four-week high as demand for havens strengthened.

In currency markets, the Swiss franc climbed to 0.9030 per euro, its strongest level in more than a decade. The US dollar index reached 98.27, a five-week high. Sterling fell to 1.3370 against the dollar, while the euro slipped to 1.1730. The dollar also strengthened to 156.4 yen, with Japan’s reliance on oil imports weighing on its currency. Norway’s crown advanced against the dollar as higher crude prices supported the energy exporter.

Equity futures pointed lower late on Monday. S&P 500 and Nasdaq futures both traded down, while FTSE futures indicated losses of around 0.6 per cent. In Asia, the Nikkei fell, with airlines under pressure from higher fuel costs. Banking shares remained fragile after the collapse of UK mortgage lender MFS, which had borrowed 2.000 billion pounds and counted major banks among its creditors.

In bond markets, the US 10-year Treasury yield steadied at 3.970 after touching 3.926 earlier. Investors are also preparing for a heavy run of US data this week, including the ISM manufacturing survey and payrolls, with markets pricing a roughly even chance of a Federal Reserve rate cut in June.