Middle East tensions push oil toward $110 as European and Asian stocks fall

Geopolitical risk and energy supply concerns stemming from the Middle East dominated global markets at the start of the new day. The possibility that clashes between the US and Iran could widen kept risk perception high, and December Brent crude moved close to $110 a barrel. Analysts said the rise in oil continues to fuel inflation fears globally.

Energy and geopolitical agenda

US President Donald Trump's decision to exempt Russia from sanctions and tariffs raised expectations that the supply of Russian oil and fuel to markets could increase. Meanwhile, attacks on energy infrastructure keep supply concerns alive. The Iran-backed Houthis in Yemen claimed they carried out attacks on 6 different areas in Saudi Arabia in the past 48 hours using ballistic missiles, cruise missiles and unmanned aerial vehicles.

US markets and bond yields

On Wall Street, the recovery in technology and AI-linked stocks continued yesterday. The S&P 500 rose 0.41%, the Nasdaq gained 1.11% and the Dow Jones slipped 0.07%. The US 10-year bond yield rose about 6 basis points to 5.15% yesterday and settled at 5.13% today. The dollar index fell 0.2% to 101.7, while gold traded 0.1% higher. Expectations remain strong that the Fed will hold its policy rate next week.

Selling pressure in Europe

After demonstrations in France marked by violence and looting, Prime Minister Sebastien Lecornu instructed prefects to impose partial curfews in some areas. In Italy, protests by truck drivers blocking road and port entrances in the south over fuel prices were reported to be spreading. France's 10-year bond yield rose 14 basis points to 4.94%, while the France-Germany spread widened to 148 basis points. The euro/dollar pair stood at 1.1234, up 0.2%. The FTSE 100 fell 1.08%, FTSE MIB 30 1.55%, DAX 40 1.18% and CAC 40 1.11%.

Asia and Borsa Istanbul

Selling dominated in Asia. In line with expectations, China held its 1-year loan prime rate at 3% and its 5-year rate at 3.5%; rates have not changed in the past 17 months. SoftBank shares fell 6.2% on concerns about the profitability of AI investments. Near the close, the Nikkei 225 was down 1.4%, the Shanghai Composite 0.4%, the Hang Seng 1.2% and the Kospi 4.3%.

In Istanbul, the BIST 100 index ended yesterday down 2.49% at 11,430.14 points. Under an appointment decision signed by President Recep Tayyip Erdoğan and published in the Official Gazette, Kutluhan Taşkın was assigned as Deputy Minister of Treasury and Finance.