Global Markets Slide and Oil Surges as Trump Warns Iran Amid Fears of Renewed Conflict

BY EMMANUEL OGBONNA

Global financial markets retreated Monday while oil prices climbed sharply after U.S. President issued a fresh warning to Iran, intensifying investor concerns that negotiations aimed at ending the conflict in the Middle East may be collapsing.

The renewed tensions rattled markets across Asia, Europe and the United States, with investors increasingly worried that instability around the Strait of Hormuz could disrupt global energy supplies and fuel a broader economic slowdown.

U.S. stock futures moved lower ahead of Wall Street trading, while Asian markets gave up recent gains that had pushed several indexes to record highs in recent sessions. Investors shifted toward safer assets as oil prices surged and government bond yields climbed in response to fears of rising inflation and escalating geopolitical risk.

In Europe, Britain’s managed a modest gain, rising 0.1% to 10,205.31 in early trading. France’s dropped 0.9% to 7,883.42, while Germany’s slipped 0.1% to 23,925.82.

Asian markets saw broader weakness, particularly among technology shares that had recently surged on enthusiasm surrounding artificial intelligence investments. In , the fell 1% to 60,815.95 after reaching record intraday highs above 63,000 last week. Technology-related companies led the decline as investors locked in profits following months of strong gains.

Bond markets in Japan also drew attention after the yield on the country’s 10-year government bond surged to 2.8%, marking its highest level since the late 1990s. Analysts said the sharp move reflected expectations that the will continue gradually tightening monetary policy while rising oil prices increase inflation pressures across the economy.

Just one week earlier, the same yield had been trading around 2.55%, underscoring how quickly market sentiment has shifted as geopolitical tensions intensified.

South Korea’s recovered from earlier losses to close 0.3% higher at 7,516.04. The benchmark index had crossed the 8,000-point level for the first time on Friday, fueled by strong demand for semiconductor and artificial intelligence-related stocks, though traders said some investors were now taking profits amid growing uncertainty over global markets.

Elsewhere in Asia, Hong Kong’s fell 1.1% to 25,675.18, while mainland China’s edged down 0.1% to 4,131.53 after weaker-than-expected economic figures for April added to concerns about slowing domestic demand in the world’s second-largest economy.

Australia’s declined 1.5% to 8,505.30, while Taiwan’s Taiex dropped 0.7%. India’s Sensex index was little changed but remained under pressure as investors monitored energy prices and currency movements.

Oil markets reacted strongly after Trump posted a warning directed at Tehran following a conversation with Israeli Prime Minister . In the message, Trump said “the clock is ticking” and warned Iran to move quickly toward an agreement “or there won’t be anything left of them.”

The comments heightened concerns that diplomatic efforts to secure a permanent end to the war were faltering despite weeks of negotiations and temporary ceasefire arrangements.

Investors have become increasingly cautious because Trump has previously imposed deadlines on Iran only to later soften his stance, creating uncertainty over whether the latest warning signals imminent military escalation or renewed pressure tactics ahead of further talks.

Much of the market’s anxiety continues to center on the Strait of Hormuz, one of the world’s most critical oil shipping routes. Although some shipping activity has resumed in recent days, the strait remains only partially operational, while the United States has maintained a maritime blockade targeting Iranian ports since last month.

The situation worsened over the weekend after a drone strike targeted the , the United Arab Emirates’ only nuclear power facility. The attack reportedly sparked a fire near the plant’s perimeter, though authorities said there were no injuries and no radiation leak.

Even so, the incident renewed fears that the conflict could expand across the Gulf region and threaten critical infrastructure tied to global energy supplies.

Brent crude, the international oil benchmark, rose 0.7% to $110.05 per barrel. U.S. benchmark crude gained 1% to $106.49 per barrel. Oil prices had been trading near $70 per barrel before the outbreak of the Iran conflict earlier this year, highlighting the scale of the disruption that markets now fear.

Analysts at Dutch financial institution warned that risks of renewed escalation were growing rapidly. Commodity strategists Warren Patterson and Ewa Manthey said the recent increase in shipping traffic through the Strait of Hormuz could reverse quickly if negotiations continue to stall or new military incidents occur.

Markets were also reacting to the absence of concrete diplomatic progress following last week’s high-profile summit in between Trump and Chinese President . While the White House said both countries agreed that the Strait of Hormuz must remain open, no breakthrough on a broader peace framework was announced.

U.S. officials have privately hoped that China, one of Iran’s largest trading partners, could use its economic influence to encourage Tehran to accept a long-term settlement. Trump said after the summit that Xi indicated China “would like to be of help” in ending the war, though Beijing has so far offered few details about any direct mediation role.

The sharp rise in energy prices also pushed bond yields higher globally. The yield on the benchmark U.S. 10-year Treasury note climbed to around 4.60%, up from 4.47% last Thursday and significantly above the near-4% levels seen before the conflict began.

Higher bond yields typically reflect expectations for stronger inflation and the possibility that central banks may need to keep interest rates elevated for longer than previously anticipated.

Wall Street ended last week under heavy pressure as investors reacted to the deteriorating geopolitical situation. The fell 1.2% after retreating from a record high reached a day earlier. The lost 1.1%, while the technology-focused declined 1.5%.

Currency markets also reflected rising uncertainty. The U.S. dollar strengthened slightly against the Japanese yen, trading at 158.82 yen compared with 158.62 yen late Friday. The euro edged higher to $1.1645 from $1.1622.

Investors are now closely watching whether diplomatic channels between Washington and Tehran can be revived before further disruptions to global energy supplies trigger a deeper sell-off across financial markets.