Crude oil costs soared beyond the $100 per barrel threshold Monday as Iran maintains its grip on the crucial Strait of Hormuz waterway, even as the United States works to restore normal shipping operations. The energy crisis sent Treasury bond yields climbing while pulling stock markets into negative territory.
Market analyst Jamie McGeever warns that consumers, businesses and investors should prepare for inflation to hit 4%. With price increases already running above the Federal Reserve’s 2% goal for an extended period, the current energy crisis will likely push inflation even higher in coming months.
Monday’s market activity showed significant regional variations. Asian markets outside Japan posted their strongest performance in a month with a 2.8% gain, led by South Korea’s KOSPI index which surged 5% to record highs. European markets moved in the opposite direction, falling 1% in their worst session in a month. U.S. markets also declined, with the Dow Jones dropping 1%.
Within the S&P 500, energy was the sole sector posting gains with a 0.9% increase, while all other ten sectors fell. Materials led the decline at -1.6%, followed by industrials at -1.2%. Individual stock movements included GameStop falling 8.5%, eBay rising 5%, UPS dropping 10%, FedEx declining 9%, Micron Technology gaining 6%, and Oracle up 5%.
Currency markets saw the Japanese yen weaken back to 157 against the dollar, with the U.S.-Iran conflict supporting dollar strength. India’s rupee hit a new low, while Bitcoin temporarily reclaimed the $80,000 level for the first time since late January.
Bond markets experienced significant moves as U.S. yields jumped approximately 6 basis points across all maturities. Two-year and ten-year yields reached their highest levels since late March, while the 30-year yield climbed above 5% for the first time since July.
Commodity markets reflected the geopolitical tensions, with Brent crude spiking 5% and West Texas Intermediate up 3%. Gold moved lower by 2%.
Artificial intelligence spending forecasts continue reaching new heights, according to major Wall Street firms. Morgan Stanley analysts now project the five largest U.S. technology companies will spend over $800 billion on AI infrastructure this year, rising to $1.1 trillion next year. Goldman Sachs expects total AI infrastructure investment to reach $7.6 trillion by 2031.
Corporate earnings expectations are also climbing dramatically. First quarter earnings are projected to grow 27.8% compared to the same period last year, according to LSEG Data & Analytics. The full-year 2026 growth forecast stands at 22.6%. These projections have nearly doubled from 14.4% on April 1, representing the highest growth expectations since late 2021.
In merger and acquisition news, GameStop has proposed a surprising $56 billion cash and stock offer for eBay. The former meme stock favorite, which gained fame during trading frenzies five years ago, is attempting to acquire the online retailer that is nearly four times its size, raising questions about financing and whether eBay might attract other suitors.
Looking ahead, markets will focus on Middle East developments, energy price movements, Australia’s interest rate decision, and economic data from Indonesia and Hong Kong. Key U.S. data releases include job openings, trade figures, and service sector activity. Federal Reserve officials and European Central Bank leaders are scheduled to speak, while major companies including AMD, Pfizer, and KKR report earnings.
