Oil Jumps 9% as Hormuz Crisis Escalates, Gold Falls Below $4,000, Stocks Retreat

Market Overview

Global markets were dominated by geopolitical tensions on Tuesday. The U.S. military launched a third consecutive night of airstrikes on Iran while enforcing a naval blockade. President Trump stated that Iran would face further military action “tonight and tomorrow” and announced a 20% surcharge on cargo shipments passing through the Strait of Hormuz.

The disruption of this strategic waterway, which handles approximately 20% of global seaborne crude oil shipments, sparked significant supply concerns. WTI crude oil for August delivery surged 9.42% to $78.14 per barrel, while Brent crude climbed 9.59% to $83.30 per barrel.

The sharp rise in oil prices fueled inflation and rate hike expectations, triggering a broad selloff in precious metals. Spot gold fell 2.93% to $3,999.06 per ounce, slipping below the key $4,000 threshold, while spot silver declined 3.77% to $57.61 per ounce.

U.S. equities closed lower across the board. The Nasdaq Composite dropped 1.55% to 25,873.18, the S&P 500 fell 0.79% to 7,515.34, and the Dow Jones Industrial Average lost 0.26% to 52,498.64. Semiconductor stocks led the decline, with Nvidia down 3.52%, AMD falling 4.21%, and SK Hynix ADRs plunging more than 9%. South Korean equities also came under heavy pressure, with the market dropping 15.37%.

Chinese equities extended their pullback. The Shenzhen Component Index declined 3.48% to 14,522.85, the ChiNext Index fell 3.10% to 3,723.52, and the Shanghai Composite dropped 2.06% to 3,913.79, slipping back below the psychologically important 4,000-point level.

Federal Reserve Governor Christopher Waller stated that additional rate hikes may be necessary if core inflation remains elevated. Following his remarks, market-implied odds of a July rate hike increased from 35% to 45%, supporting a stronger U.S. dollar.

Meanwhile, Bitcoin fell more than 3%, briefly dropping below $62,000. In India, June CPI accelerated to 4.38%, exceeding the Reserve Bank of India's 4% inflation target for the first time.

Key Themes to Watch● Oil Prices and Inflation Under the Strait of Hormuz Disruption

Iran's blockade of the Strait of Hormuz, combined with a third round of U.S. airstrikes, pushed crude oil prices higher by more than 9% in a single session after four consecutive weeks of declines.

As this critical shipping corridor carries roughly one-fifth of global seaborne oil trade, any prolonged disruption could significantly influence the inflation outlook for the second half of the year. The trajectory of oil prices is likely to play a crucial role in shaping future Federal Reserve policy decisions.

● U.S. June CPI and the Start of Earnings Season

With surging oil prices adding to inflation concerns and Waller's hawkish comments reinforcing expectations for tighter monetary policy, investor focus has shifted sharply toward inflation data.

The release of the U.S. June Consumer Price Index (CPI) later today is expected to serve as a major market catalyst. At the same time, earnings reports from Wall Street's five largest banks will officially kick off the earnings season. Amid higher interest rates and increased market volatility, investors will closely scrutinize banks' net interest margins and credit quality trends.

Key Events to Watch

• China June Import and Export Data

• U.S. June Consumer Price Index (CPI)

• Federal Reserve Chair Walsh's Congressional Testimony

• Earnings Reports from Wall Street's Five Major Banks