(Bloomberg) -- Financial markets got off to a volatile start on Monday, with US equity-index futures and crude oil getting whipsawed as the war in Iran entered a fourth week with no sign of de-escalation.

Crude oil swung sharply, jumping 1.9% initially, before reversing to fall nearly 1.8% to $110 a barrel. S&P 500 futures were similarly choppy, briefly gaining before settling down 0.1%. Australian shares fell 2% at the open and futures pointed to a weak start for equities across the region.

Australia’s 10-year government bond extended losses, with yields on the benchmark note rising 11 basis points on Monday.

Tensions in the Middle East showed no signs of easing with President Donald Trump issuing a 48-hour ultimatum to Tehran to reopen the Strait of Hormuz or face strikes on its power plants, a deadline that expires Monday evening in New York. Iran responded that any such attack would prompt it to shut the waterway indefinitely and target US and Israeli energy infrastructure across the region.

“Pulling back on this war is not Trump’s sole decision,” Matt Maley, the chief market strategist at Miller Tabak, said in an interview. “Uncertainty has been increasing for three weeks and the uncertainty took a big jump now. Even if people don’t sell, they are not going to be buying — and if there are no bids, it creates a vacuum.”

Global markets have been ravaged by the US-Iran war, which saw stocks and bonds sell off in tandem last week. US yields are perched at their highest in months after a third straight week of bond losses. Short-term notes led last week’s rout, with two-year Treasury yields climbing 18 basis points to 3.90%, following selloffs in European bond markets as investors positioned for higher rates.

The selloff in the US accelerated on Friday as traders started anticipating that the Federal Reserve may shift to hiking interest rates this year as oil prices threaten to deliver a fresh inflation shock. Markets are bracing for similar moves from central banks in Japan, Europe and the UK, even as the war also dampens the outlook for economic growth globally.

After markets closed on Friday, Trump indicated he was looking for a way to pull back from the war by saying on social media that he was considering winding down military efforts in Iran, claiming the US was “very close” to meeting its objectives. But his later threats to bomb power plants — and Iran’s vow to retaliate — showed little progress toward a ceasefire.

“It’s a soft start for risk, but perhaps surprisingly contained given the ultimatum hanging over the market,” said Chris Weston, the head of research at Pepperstone Group in Melbourne.

The twin risks of rising inflation and potentially weaker growth drove the S&P 500 down by 1.5% on Friday, capping its fourth-straight weekly loss, the longest losing streak in a year. The benchmark 10-year Treasury yield surged by 13 basis points to 4.38%, the highest since late July.

The standoff over Hormuz — through which roughly a fifth of the world’s oil and liquefied natural gas normally flows — has deepened a supply crisis already rippling into gasoline prices, fertilizer costs and food production. Traffic through the strait has effectively ground to a halt since the conflict began at the end of February.

In other commodities, gold was little changed after the biggest weekly decline in more than 40 years. Silver gained over 1% in early Monday trading.

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 8:13 a.m. Tokyo time

Hang Seng futures fell 2.1%

Australia’s S&P/ASX 200 fell 1.8%

Currencies

The Bloomberg Dollar Spot Index was little changed

The euro was little changed at $1.1561

The Japanese yen was little changed at 159.15 per dollar

The offshore yuan was little changed at 6.9055 per dollar

The Australian dollar fell 0.2% to $0.7010

Cryptocurrencies

Bitcoin rose 0.4% to $68,440.91

Ether rose 0.7% to $2,072.78

Bonds

Australia’s 10-year yield advanced 12 basis points to 5.14%

Commodities

West Texas Intermediate crude fell 0.3% to $97.94 a barrel

Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Joanna Ossinger.

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