Morning Bid: Hormuz haze hits markets

• Oil prices jumped sharply with Brent up $10 from Friday's close; U.S. government planning announcement Tuesday on potential Strategic Petroleum Reserve release or consumer subsidies
• Major indices tumbled: South Korea's Kospi down 7%, Japan's Nikkei and European indices down 3%, with Wall Street futures falling 2% as Monday's tech-led bounce proved short-lived
• Markets now expect no Fed rate cut until September with only 42 basis points of cuts priced for 2026; European natural gas hit 3-year highs (up 30% year-over-year) after attacks on Qatar's energy infrastructure

Market Summary: Hormuz Haze Hits Markets

Key Developments

Escalating Middle East conflict between the U.S., Israel, and Iran entered day three, with no clear end in sight. Iran continues retaliating against weekend strikes, targeting shipping, oil and gas installations, and military/civilian infrastructure.

Energy Markets

• Brent crude: Hit 14-month high at $82.37/barrel, up $10 from Friday's close
• U.S. crude: Reached 8-month high at $75.55/barrel
• European natural gas: Hit 3-year high, up 30% year-over-year
• U.S. government plans Tuesday announcement on potential Strategic Petroleum Reserve release or domestic subsidies

Equity Markets

Global sell-off accelerated after Monday's brief Wall Street bounce proved short-lived:

• S&P 500 futures down nearly 2%
• Japan's Nikkei, Eurozone Stoxx, UK FTSE 100: all down ~3%
• South Korea's Kospi plummeted 7% on return from holiday

Fixed Income & Central Banks

• U.S. 10-year Treasury yields up 13 basis points from Friday
• Fed rate cut expectations pushed to September; only 42bps of cuts priced for full year
• ECB rate cut expectations also diminished
• U.S. manufacturers reported highest input price increases since 2022 in February

Currency Markets

• Dollar strengthening on relative energy impact
• Euro at lowest in six weeks
• Bank of Japan warned on yen weakness intervention
• Swiss National Bank countering franc's safe-haven rise

Regional Impact

Qatar, the world's third-largest LNG exporter (19% of 2025 global exports), condemned Iranian attacks on its territory after infrastructure strikes drove natural gas price spikes.

Corporate earnings: Target, Best Buy, CrowdStrike reporting Tuesday.