Asian share markets drop, oil and bond yields rise

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.9%

Asian share markets dropped on Monday as renewed attacks in the Gulf push oil prices and bond yields higher, while the AI boom is set to ​be tested by earnings from Nvidia this week.

A drone strike caused a fire at a nuclear power plant in the United Arab Emirates, while Saudi Arabia reported intercepting three drones.

Meanwhile, the vital Strait of Hormuz remains closed to all but a trickle of shipping as Tehran formalises its control of the waterway that during normal times carries 20% of the world’s oil trade.

The closure is draining global oil inventories fast, said analysts at Capital Economics. Inventories could reach critical levels by end-June, setting the stage for Brent at $130-140pb, if not higher.

If the strait is closed through year-end ​and oil stays around $150pb into 2027, that would push inflation to near 10% in euro zone, send rates back to their recent peaks and lead to global recession, they said.

Brent was ​trading up 1.9% at $111.34 a barrel, while U.S. crude jumped 2.3% to $107.84 a barrel.

Nikkei dropped 1.1%, having declined 2% last week from record highs. South Korean stocks shed 0.1%, as the strong ​market cooled just a little after demand for semiconductors drove it to all-time highs.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.9%.

Chinese blue chips held steady, having hit their highest level in more than four years last week.

Global bond markets were hammered on Friday on concerns that energy costs would stay high and thus ​continue to drive inflation.

Japanese ​yields hit highs not seen since 1996 as the government proposed to issue new debt to fund a planned extra budget to cushion the economic blow from the U.S.-Israeli war on Iran.