Oil prices surged and global stock markets tumbled on Wednesday following U.S. President Donald Trump’s remarks casting doubt on the temporary ceasefire in the conflict with Iran. The S&P 500 dropped by one percent, the Dow Jones Industrial Average slid by 1.6 percent, and the Nasdaq composite was down by one percent.
Canada’s key index, the S&P/TSX, also experienced a decline of approximately 1.5 percent by midday. Meanwhile, in the oil market, the price of Brent crude oil spiked by eight percent to $80.09 US around midday. This increase, though below previous peaks, raised concerns as oil prices had just returned to pre-war levels.
The fear is that a prolonged conflict could obstruct the vital Strait of Hormuz, potentially disrupting oil shipments globally and exacerbating inflation. This situation might compel central banks to raise interest rates, which could stifle economic growth and impact various investment sectors.
Trump’s comments about the ceasefire status triggered immediate market reactions, with losses deepening in European stock markets and oil prices rising. Trump indicated that negotiations could continue, but expressed skepticism about their effectiveness, stating that the U.S. representatives might be wasting their time.
Further unsettling the markets, Trump mentioned that the United States was preparing for additional strikes against Iran. On Wall Street, companies heavily reliant on fuel, such as American Airlines and United Airlines, saw significant declines.
Stocks in the housing sector were also affected due to concerns about rising Treasury yields leading to higher mortgage rates. However, some AI industry stocks stabilized after recent volatility, with companies like Nvidia making modest gains.
In the bond market, Treasury yields increased alongside oil prices. Stock markets in Europe and Asia experienced losses, with Germany’s DAX dropping by 2.2 percent and South Korea’s Kospi falling by 5.3 percent. Hong Kong’s Hang Seng index bucked the trend, rising by three percent. Chinese AI startup Zhipu’s shares surged by 13.4 percent in Hong Kong trading, following a remarkable 1,300 percent increase since its debut.
