US-Iran war worsens: yields rise and AI claims shake markets

Between September 12 and 15, financial markets faced a particularly challenging combination: geopolitical escalation in the Middle East, a new energy shock, expectations of tighter monetary policy, and a sharp correction in the artificial intelligence (AI) technology sector.

The result was a cross-sectional movement across nearly all major asset classes. Oil returned above $100, bond yields reached levels not seen in years, the dollar strengthened, and global equities lost ground, while gold and industrial metals were also impacted by rising real rates.

The Middle East returns to the centre of the markets

The main source of instability has once again come from the Middle East. The Houthi advance toward Perim Island has brought renewed attention to the Bab el-Mandeb Strait, one of the most important passages for global energy traffic.

The situation has worsened with new attacks on Saudi infrastructure and the blockade of the East-West pipeline, one of the main alternatives to the routes through the Strait of Hormuz. In a prolonged disruption scenario, up to 4% of global oil supply could be exposed to logistical risks.

The market reacted quickly. Brent crude closed Monday at $105.68 a barrel , after gaining nearly 9% in the previous week , before rising above $108 again on Tuesday.

The energy shock wasn't limited to the crude oil market. In the United States, the average price of diesel surpassed $6.20 per gallon , marking a new all-time high and immediately fueling fears of a second wave of inflation linked to transportation and production costs.

More expensive oil, higher rates

Rising energy prices have rapidly changed central bank expectations.

In the United States, the market has raised the implied probability of a 25 basis point Fed Funds hike to over 90% , showing how quickly the narrative has shifted from the possibility of a monetary pause to the need to maintain a more restrictive policy.

The movement was immediately reflected in Treasuries. The yield on the 10-year US bond surpassed 5% , reaching around 5.03% , a level not seen since 2007.

Europe also followed the same path. The ten-year German Bund reached around 3.56% , a seventeen-year high, while the market began to price in a potentially more aggressive ECB stance should the energy shock translate into persistent inflation.

The consequence is clear: with bond yields so high, valuing risky assets becomes more difficult. Growth stocks, in particular, are penalized because much of their value depends on expected earnings far in the future, which are discounted at significantly higher rates today.

Strong dollar, weak gold

The rise in yields supported the dollar. The dollar index rose towards 99.6 , while the USD/JPY exchange rate surpassed 155. The euro, on the other hand, fell towards 1.154 dollars .

This dynamic also had important effects on precious metals.

Despite the geopolitical environment normally favorable to safe-haven assets, gold failed to fully benefit from international tensions. The price fell to around $4,296 an ounce , penalized by the combination of a strong dollar and rising real yields.

Gold's behavior clearly illustrates the conflict the market is experiencing: on the one hand, demand for protection against war and inflation is increasing, while on the other, the opportunity cost of holding assets that produce no return is becoming increasingly high.

AI becomes a new risk factor

Pressure from oil and interest rates was compounded by a particularly sharp correction in the technology sector.

Statements from the heads of some of the major companies involved in the development of artificial intelligence, in favor of slowing the pace of development for security reasons, have triggered a reassessment of expectations for future investments in chips, data centers, and digital infrastructure.

The Philadelphia Semiconductor Index lost about 5-6% , dragging the entire sector down.

Nvidia dropped around 3% , AMD 4.5% , Micron over 5% , while ASML lost around 6% . SoftBank reacted even more sharply, dropping by more than 10% .

The movement highlights how a significant portion of market valuations is now focused on the AI sector's ability to sustain exceptionally high investment rates. Any signs of a slowdown can therefore lead to very rapid corrections, especially after months of multiple expansion.

Copper and industrial raw materials under pressure

Rising rates and a strengthening dollar have also hit industrial metals.

Copper listed on the London Metal Exchange fell to around $13,958 a tonne , moving more than 6% away from recent highs.

The movement reflects multiple factors: a strong dollar, rising inventories, slowing demand expectations, and tighter financial conditions. For a metal closely tied to the global economic cycle, the combination of high yields and slower growth is particularly negative.

A market once again dominated by macroeconomics

The sessions between September 12th and 15th showed a market that suddenly returned to being dependent on macroeconomic variables.

The sequence is clear: geopolitical escalation, rising oil prices, rising inflation expectations, rising bond yields, and pressure on equity valuations.

Adding to this chain was the specific risk associated with artificial intelligence, which accentuated the losses in the technology sector just as interest rates were once again becoming the main obstacle for growth stocks.

For investors, the decisive variable remains the duration of the energy shock. If tensions over Hormuz and Bab el-Mandeb were to continue, oil and inflation could keep central banks on a more restrictive path. In this scenario, volatility and selectivity could remain elevated well beyond the current period of tension.