Oil tops $100, European stocks drop on fresh Gulf attacks

On September 9, oil prices surged past $100 a barrel for the first time since July, causing European stocks to drop as tensions in the Gulf escalated. All three major U.S. indices ended the day lower, with the Dow Jones Industrial Average falling by 0.77 percent, the S&P 500 dropping 0.48 percent and the Nasdaq Composite declining 0.64 percent. MSCI's gauge of global stocks also fell by 0.52 percent after the U.S. market closed.

Iran claimed responsibility for attacking 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers. Brent crude settled at $101.21 a barrel, representing a 3.4 percent increase for the day, while U.S. West Texas Intermediate crude rose by $3.02, or 3.25 percent, to $96.05 a barrel. Both prices marked the highest closing levels seen since May.

Meanwhile, yields on U.S. 10-year notes rose 3.66 basis points to 4.841 percent, reaching levels not observed since November 2023. This increase came after the Treasury Department announced it would purchase up to $6 billion in 10-to-20-year government bonds, which exceeded the initially signaled $4 billion.

Experts noted that a prolonged oil shock could maintain inflation pressures, complicating the policy environment for central banks already grappling with a challenging economic landscape. With the euro edging higher ahead of the European Central Bank's policy decision on Thursday, markets anticipated a potential rate hike due to inflation concerns stemming from the Iran conflict.

At the same time, the yen strengthened to near-seven-month highs against the dollar as traders exited short positions in the Japanese currency. The Federal Reserve's September meeting remains uncertain, with only 70 percent of economists surveyed expecting a rate hike, compared to the 90 percent expectation in August.