Oil prices surged while global stock markets faltered on Wednesday following U.S. President Donald Trump’s comments casting doubt on the temporary ceasefire with Iran. The S&P 500 dropped 0.3%, with the Dow Jones Industrial Average falling 1.1% and the Nasdaq composite recovering from an early decline to rise 0.2% after Trump’s statements. Canada’s S&P/TSX index closed the day down approximately 1%.
In the oil market, the price of Brent crude per barrel spiked by 5.2% to $78.02 US, briefly exceeding $80 US. Concerns arose as oil prices, which had recently returned to pre-war levels, might face disruption if the conflict continues, potentially blocking the Strait of Hormuz and hindering global crude oil deliveries.
The possibility of heightened inflation due to the conflict could prompt central banks to raise interest rates, impacting economic growth and investment values. On Wall Street, companies heavily reliant on fuel experienced significant declines, with American Airlines and cruise operator Carnival losing 4% and 3.9%, respectively.
Stocks in the housing sector also suffered as rising Treasury yields raised concerns about increased mortgage rates. Builders FirstSource, PulteGroup, and D.R. Horton all saw declines. Conversely, certain AI industry stocks stabilized, alleviating some market pressures. Nvidia notably rose 3.7%, exerting upward pressure on the S&P 500.
Bond market yields increased alongside oil prices, with the 10-year Treasury yield reaching 4.57%. Losses deepened in European markets after Trump’s remarks, with Germany’s DAX and France’s CAC 40 both declining by 2.2%. In Asia, South Korea’s Kospi fell by 5.3%, while Hong Kong’s Hang Seng index bucked the trend by rising 3%.
Notably, Chinese AI startup Zhipu’s shares surged by 13.4% in Hong Kong trading, following a remarkable 1,300% increase since its debut earlier in the year.