Oil prices surged Monday as Iran maintained its closure of the Strait of Hormuz, while global stock markets showed mixed results, with significant gains for technology and defense sectors, even as U.S. employers cut 23,000 jobs last month. The ongoing standoff in the Middle East continues to reshape investment flows, funneling wealth towards those positioned to profit from geopolitical instability.
Iran's Foreign Ministry spokesperson, Esmail Baghaei, stated Monday that the Strait of Hormuz would not reopen until the United States met its conditions. Baghaei specifically cited the American blockade of Iranian ports as an “illegal and destructive action.” Tehran demands the U.S. lift the blockade, provide compensation for months of war damage, end economic sanctions, and release Iran’s frozen assets.
The Imperial Blockade and Capital's War Dividend
The Strait of Hormuz, a critical chokepoint, normally handles roughly one-fifth of the world’s traded oil supplies. Its closure has become the war’s most enduring consequence, driving energy prices and influencing U.S. politics ahead of the midterm elections later in 2026. Oil prices saw further increases after Israel rejected a deal for Gaza, which U.S. President Donald Trump had announced. Iran is also engaged in separate discussions with Oman regarding transit through the strait, exploring a potential temporary shipping corridor, though any full reopening hinges on U.S. negotiations.
Early European trading saw Germany’s DAX rise 0.3% to 26,411.01, while Paris’s CAC 40 dipped 0.1% to 8,703.73. Britain’s FTSE 100 lost 0.3% to 10,869.35. The future for the S&P 500 was up 0.1%, and the Dow Jones Industrial Average slipped 0.1%. Tokyo’s Nikkei 225 jumped 2.1% to 66,970.22, propelled by strong gains in technology companies, with computer chip equipment maker Tokyo Electron climbing 4.1% and chip testing device maker Advantest rising 6.4%. In South Korea, the Kospi added 0.7% to 6,299.66, even as major chipmakers Samsung Electronics and SK Hynix saw slight losses.
Analysts confirmed that foreign investors were actively selling shares in Big Tech companies to secure profits from recent gains. These investors then rebalanced their holdings into other industries, notably defense contractors, demonstrating a clear shift of capital towards sectors benefiting from conflict. Hong Kong’s Hang Seng gained 1.1% to 25,937.49, and the Shanghai Composite index picked up 0.7% to 3,966.59. Australia’s S&P/ASX 200 lost 0.3% to 9,232.60, while Taiwan’s Taiex surged 1.6% and India’s Sensex remained nearly unchanged.
Brent crude, the international standard, gained 0.8% to $84.23 per barrel. U.S. benchmark crude advanced 0.7% to $78.72 per barrel. Bas van Geffen, a senior macro strategist for Rabobank, observed that while a deal for a safe shipping route was reportedly close, Iran might be “exploring just how much it can extract from the U.S. in return.” Meanwhile, Yemen’s Iranian-backed Houthi rebels struck a government-held port on the country’s Red Sea coast, escalating fears over strategic shipping routes and the potential for renewed civil war, further underscoring the military dimension of capital’s global reach.
Workers' Mounting Burden
This week, U.S. investors await several inflation updates, with the consumer price index (CPI) being the most closely watched. Inflation in July is projected to have risen at a 3.4% rate, a slight decrease from 3.5% in June, but it has persistently remained above 3% for most of the year, eroding workers' purchasing power. On Friday, U.S. stocks rose and Treasury yields fell after the government reported an unexpected cut of 23,000 jobs last month, revealing the precarity of labor in the current economic climate.
A weaker jobs market, paradoxically, fueled hopes among investors that the Federal Reserve might delay raising interest rates to combat inflation. This speculation buoyed share prices, pushing every major index to a second consecutive week of gains and several fresh records. The S&P 500 rose 0.6% to 7,757.64, reaching an all-time high. The Dow industrials rose 0.3% to 54,036.93, just shy of its Wednesday record. The Nasdaq composite climbed 1.3% to 26,690.62. The jobs report also included revisions for June and May, slashing a combined 103,000 jobs from payrolls for those months. This slowing employment complicates the Fed’s stated effort to balance job growth with fighting inflation, as higher interest rates, while potentially taming inflation, make it harder for businesses to expand. Technology stocks, including Nvidia, which jumped 2.3%, and Broadcom, which rose 1.7%, continued to perform much of the heavy lifting for the broader market, concentrating wealth at the top. In other dealings early Monday, the U.S. dollar rose to 158.72 Japanese yen from 157.71 yen, while the euro fell to $1.15617 from $1.1568.