New York/Tokyo | US President Donald Trump’s Oval Office address has created new instability in global financial markets. Despite Trump calling military action against Iran an “investment in the future”, investors viewed it as a risk, leading to a decline in Asian markets and a sharp rise in energy prices. Commodity Market: Crude oil prices ‘fire’ The international oil market witnessed tremendous fluctuations during and immediately after Trump’s speech:
Brent Crude: Brent crude, which was trading at $100 before the speech, rose by 4% to reach $105.38 per barrel.
Hormuz Crisis: The Strait of Hormuz, the route for 20% of the world’s energy supply, is almost closed since February 28. Trump’s statement of putting the responsibility of its security on other countries has increased the fear of supply chain disruption.
Equity Market: Selling in Asian and American markets
The market was hoping that Trump would give a clear ‘exit plan’ to end the war, but when that did not happen, investors started selling:
Asian decline: Japan’s Nikkei fell 1.5%, South Korea’s Kospi fell 2.6% and Hong Kong’s Hang Seng fell 1%.
US Futures: Dow Jones and S&P 500 futures fell by 0.7% and Nasdaq futures by 1% even before the US market opened.
Main reasons for investors’ concern
According to market watchers and experts (like Melissa Toufanian and Ivo Daalder), the market is scared for these 3 reasons:
Lack of clarity: Trump gave a deadline of “2 to 3 weeks” but did not present any concrete roadmap to end the war.
Contradictory claims: If Iran’s navy and air force have been destroyed, investors do not understand the logic of continuing military action.
Regional dependence: Large oil importing countries such as India, Japan and South Korea are most sensitive to Middle East tensions, putting pressure on their economies.
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