GLOBAL MARKETS: Oil jumps, stocks mixed after US disputes Iran's claim it halted American warship

Brent crude oil jumped around 2% on Monday and the dollar strengthened amid conflicting reports from Iran and the U.S. about American warships in the Strait of Hormuz.

U.S. stocks were mixed, with the Dow Jones Industrial Average .DJI down 0.5%, the S&P 500 .SPX 0.05% lower, and the Nasdaq Composite .IXIC up 0.12%.

Iran's navy prevented "American-Zionist" warships entering the Strait of Hormuz on Monday, state TV reported, while the Fars news agency said two missiles had hit a U.S. warship near Jask on the Gulf of Oman after it ignored Iranian warnings.

Reuters could not independently verify the reports. The U.S. military said two U.S. Navy guided-missile destroyers had entered the Gulf to break an Iranian blockade and that two U.S. ships had transited the Strait of Hormuz.

IRANIAN WARNING TO US FORCES

Iran's military had earlier on Monday warned U.S. forces not to enter the Strait of Hormuz after President Donald Trump said the U.S. would start helping to free ships stranded in the Gulf by the U.S.-Israeli war on Iran. He provided few details of the plan.

U.S. crude CLc1 was last up 0.1% to $102.03 a barrel and Brent LCOc1 rose to $110.36 per barrel, up 2% on the day.

Analysts said, however, high prices were not sustainable longer term because of their impact on demand and the economy.

"The market is being pulled in two opposing directions right now: on one hand, geopolitical risk is pushing oil higher and reviving inflation fears, but on the other, underlying growth especially in the U.S., is clearly softening," said Bruno Schneller, managing partner at Erlen Capital Management, a multi-family office.

This combination was driving some of the big market swings recorded in stocks, bonds and currencies, he added.

MSCI's broadest index of global shares outside Japan .MIWD00000PUS rose, led by gains in Asian stocks with the tech-heavy South Korean stocks .KS11 closing over 5% higher. Hong Kong's Hang Seng index .HSI gained 1.2%.

In Europe, the performance of German carmakers weakened the region's start to the week after Trump said on Friday that Washington would raise tariffs on European cars and trucks.

The pan-European STOXX 600 .STOXX index was last down 0.6%. Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, was last up 2 basis points at 3.052%. Bond yields move inversely to prices. Markets in London were closed for a public holiday.

CENTRAL BANKS WARN OF INFLATION RISKS

As another earnings-heavy week began, concerns remained about the scale of artificial intelligence capex investment, now at $751 billion for 2026, $80 billion above estimates at the start of the earnings season and 83% above 2025 spending.

Companies reporting this week include Advanced Micro Devices AMD.O, Super Micro Computer SMCI.O, Palantir PLTR.N, Walt Disney DIS.N and McDonald's MCD.N.

"Judging by last week, the market’s recipe for near-term upside will be sidestepping negative surprises out of the Middle East to allow what has been a stronger-than-average earnings season to continue to dominate sentiment," Chris Larkin, managing director for trading and investing at E*TRADE from Morgan Stanley, said on Monday.

The threat of oil-driven inflation also lifted bond yields in a challenge to equity valuations, while several major central banks have turned hawkish on policy.

Market participants no longer expect the U.S. Federal Reserve to lower rates this year and have priced in interest-rate hikes from the European Central Bank and Bank of England 0#USDIRPR, 0#ECBIRPR, 0#GBPIRPR.

Barclays on Monday joined the brokerages betting the Fed will not ease rates this year.

Data this week, including Friday's April payrolls report, could shift the Fed outlook.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 3.6 basis points to 4.414%, from 4.378% late on Friday.

FOREX MARKETS ON ALERT FOR YEN INTERVENTION

In forex markets, traders remained on edge over potential Japanese intervention to boost the yen.

The yen jumped in Asian trading, with the dollar JPY=EBS falling sharply before paring some of the losses. Traders are on alert after some market players believe Tokyo stepped into the market last week.

The dollar was last broadly flat against the yen at 156.98 JPY=EBS, having fallen to as low as 155.7 yen earlier, as traders smarted from possible intervention that analysts thought could have amounted to around $35 billion.

"But fundamentals remain in favour of USD/JPY, meaning USD/JPY will sooner or later recover and force the MoF’s (ministry of finance) hand again," said Carol Kong, a currency strategist at the Commonwealth Bank of Australia, who added that given the size of Monday's moves, she doubted Japan had interfered.

The euro fell 0.04% to $1.17 EUR=EBS, while sterling inched lower to $1.356 GBP=. The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.11%.

In commodity markets, gold fell more than 1% to $4,565 an ounce XAU=. GOL/

-Lawrence Delevingne and Nell Mackenzie/Reuters