Oil prices surged while global stock markets tumbled on Wednesday as U.S. President Donald Trump cast skepticism on the temporary ceasefire with Iran. The S&P 500 dropped 0.3%, the Dow Jones Industrial Average fell 1.1%, and the Nasdaq composite initially declined but later rose 0.2% after Trump’s statements. Canada’s S&P/TSX index closed the day down around 1%.
In the oil market, the price of a barrel of Brent crude soared 5.2% to $78.02 US, briefly exceeding $80 US. This increase, although below previous war peaks, was concerning as oil prices had just recently returned to pre-war levels. Concerns persist that a prolonged conflict could disrupt oil shipments through the Strait of Hormuz, potentially leading to inflation spikes and prompting central banks to raise interest rates.
On Wall Street, companies heavily reliant on fuel, like American Airlines and cruise operator Carnival, experienced significant declines. Housing industry stocks were also impacted by fears of rising Treasury yields affecting mortgage rates. Builders FirstSource and homebuilders like PulteGroup and D.R. Horton saw declines.
Despite these losses, certain influential artificial intelligence stocks stabilized after recent volatility. Notably, Nvidia’s 3.7% increase had a notable positive impact on the S&P 500 due to its significant market presence. Bond market yields rose alongside oil prices, with the 10-year Treasury yield briefly nearing 4.60%.
Overseas, European markets saw increased losses following Trump’s ceasefire remarks. Germany’s DAX and France’s CAC 40 both dropped 2.2%. In Asia, South Korea’s Kospi fell 5.3%, while Hong Kong’s Hang Seng index rose 3%. Chinese AI startup Zhipu’s shares in Hong Kong surged 13.4%, with a notable increase of over 1,300% since its January debut.
The fluctuating market conditions reflect the ongoing uncertainty surrounding geopolitical tensions and their potential economic implications.