Global equity markets experienced a broad sell-off on Monday as escalating U.S.-Iran tensions drove oil prices sharply higher, with Brent crude rallying 3.8% to $78.86 per barrel following Iran's announcement that it had closed the Strait of Hormuz, a critical chokepoint for global oil shipments. The geopolitical shockwave sent MSCI's world stock index down 0.38%, led by technology shares, while U.S. Treasury yields jumped as traders priced in a higher probability of additional Federal Reserve rate hikes.
U.S. stock futures for the Dow Jones, S&P 500, and Nasdaq all fell ahead of the opening bell, with major tech names such as Micron, Nvidia, and Intel trading lower. The dollar strengthened as investors sought safe-haven assets, while energy and infrastructure stocks, including QXO and Mader Group, posted gains on the back of rising commodity prices. The broader market remains on edge ahead of key U.S. inflation data due Tuesday and earnings reports from major banks, Netflix, and General Electric later this week.
In Asia, South Korea's KOSPI index tumbled 7.6%, dragged down by heavy selling in chipmaker stocks following SK Hynix's 14% surge in its Nasdaq debut. The sell-off in Seoul underscored the vulnerability of export-oriented economies to both geopolitical risks and a potential slowdown in global demand. Analysts noted that mounting concerns over massive AI-related capital expenditures are amplifying market volatility, as investors question whether the technology sector's lofty valuations can be sustained.
On the commodities front, the oil price spike lifted shares of infrastructure and shipping companies, with QXO and Mader Group both seeing gains on expectations of higher revenue from stronger commodity prices. The U.S. dollar index climbed, reflecting a flight to safety, while government bond yields rose as traders anticipated that the Fed may need to continue tightening monetary policy to combat any inflation spillover from higher energy costs.
In corporate news, Amerigo Resources (TSX:ARG) announced a special cash dividend of C$0.18 per share, payable on August 6, 2026, to shareholders of record as of July 13, 2026. The copper miner continues to focus on returning capital to shareholders, citing solid earnings and strong return on equity. However, the sustainability of these payouts remains in question as the company navigates fluctuating commodity prices and production targets. The stock is currently trading approximately 20% below analysts' fair value estimates, which range from C$7.00 to C$8.75, reflecting divergent views on the company's cash generation and balance sheet flexibility.
Meanwhile, Mesoblast Limited (ASX:MSB) saw its shares jump 6.25% to A$2.38 after reporting early revenue of approximately US$36 million for the June quarter and US$115 million from its FDA-approved product Ryoncil in its first full year of U.S. commercialization. The company's transition from a clinical-stage biotech to a commercial entity has captured investor attention, with the market now focused on label expansion for adult steroid-refractory acute graft-versus-host disease, updates on Revascor in heart failure, and a year-end cash position of roughly US$130 million.
In the UK, PageGroup (LON: PAGE) reported a 0.2% decline in Q2 gross profit to £197.6 million, a significant improvement from the 4.9% drop in Q1. The recruitment firm saw strength in the Americas and Asia-Pacific regions, which offset softer conditions in Europe, while executive recruitment surged 15%. The company maintained its full-year operating profit target of £28 million, citing mixed market conditions and limited visibility. Staff reductions of 1.6% helped boost gross profit per fee earner by 5%, and a £40 million annual cost-saving program contributed to steady net debt of £7 million after dividend payments.
On the London Stock Exchange's AIM market, new listings from Cambridge Cognition and Pulsar Helium signaled renewed interest in growth stocks. The RBC Target 2025 U.S. Corporate Bond ETF remained neutral after AI trading signals flashed both buy and short opportunities. Plus500 reported a 24% increase in customer income for the first half of 2026, driven by rising user activity, growth in sports prediction in the U.S., and higher Canadian OTC trading volumes. The fintech kept its full-year outlook unchanged.
Historical patterns suggest that U.S. midterm election years often bring significant market drawdowns. Since 1957, the S&P 500 has experienced an average intra-year decline of 18% during midterm years, with a 70% probability of a correction and a 35% chance of entering bear market territory. Political uncertainty is cited as the primary driver. However, the index typically rebounds strongly after the elections, gaining an average of 14% over the following six months. For 2026, analysts project S&P 500 earnings growth of 24%, with AI investment playing a key role. Wall Street expects the index to rise 19% by mid-2027, but experts caution against trying to time the market during periods of volatility.
In a notable development, famed investor Michael Burry, who predicted the 2008 housing crisis, has taken short positions against major AI-related stocks, including Applied Materials, Tesla, Caterpillar, and the iShares Semiconductor ETF. Burry has described the current environment as the 'beginning of the end' for the sector, pointing to overvaluation after three years of double-digit gains driven by AI hype and nearly $700 billion in expected 2024 investment. His bearish bet adds to the uncertainty surrounding the technology sector's near-term prospects.
