Oil Price Surge and Inflation Fears Send Global Markets Plummeting

Global markets took a hit on their first trading day of September, as tensions between the US and Iran escalated. The resumption of armed conflict sent oil prices surging over 4%, while sovereign bond yields rose in tandem, dampening investor sentiment.

The Dow Jones Industrial Average fell 0.79% to close at 52,766.88, while the S&P 500 dropped 0.71% to 7,631.47. The Nasdaq tumbled 1.03% to 26,099.77, as tech stocks declined across the board.

Apple was a rare bright spot, with its shares rising 2.53% on the appointment of John Ternus as CEO and its safe-haven appeal. However, this couldn't offset the decline in other big tech names, including Tesla, Nvidia, and Alphabet.

The surge in oil prices and Treasury yields has reignited inflation fears, with the probability of a Fed rate hike in September surging to 66.4%. Barclays has revised its forecast to predict two 25-basis-point rate hikes this year, one in September and one in December.