Trump's Strait of Hormuz remarks shake global markets

U.S. President Donald Trump's planned steps to ensure the security of maritime trade in the Strait of Hormuz created a short-term relief effect on global markets. The S&P 500 index, which fell by up to 2.5 percent during the day, recovered some of its losses toward the close and finished the day with a decline of less than 1 percent. However, in the oil market, while the pace of the rise in Brent crude oil slowed, volatility continued; the price per barrel retreated to the 80 dollar level in post-close trading.

According to Adam Turnquist of LPL Financial, the developments indicated that the pressure on inflation has partially eased as the probability of a major shock to global oil supply has decreased. In this environment, U.S. Treasury bond yields limited their rise; the ten-year bond yield climbed 2 basis points yesterday.

BRENT OIL INCREASED

Trump's approach, developed around the insurance and military escort protection of oil tankers passing through the Strait of Hormuz, led to instantaneous fluctuations in energy markets. Brent oil recorded its largest jump since 2020 with a remarkable 12 percent increase over two days, rising above 82 dollars per barrel. However, with the latest trades, this rise retreated to the 1.6 percent level. West Texas Intermediate found balance around 75 dollars.

On the other hand, the ounce price of gold, seen as a safe haven, showed a 1.4 percent increase. U.S. index futures also traded in negative territory. President Trump's statements regarding the possibility of ending trade relations with Spain directly affected Spanish stock markets; a value loss of up to 7 percent was seen in the iShares MSCI Spain ETF.

Asian markets also witnessed sharp sell-offs due to the impact of global tension. The South Korean stock market stood out by experiencing its largest drop since the 2008 financial crisis, falling 12 percent. While the MSCI Asia Pacific Index fell 4.5 percent in the region, losses reached 4 percent in Japan and 2.8 percent in Hong Kong. The Indian stock market also finished the day with a 2 percent loss. The Thai market halted trading after an 8 percent drop.

The Bloomberg Dollar Index, which had been on an upward trend throughout the week, maintained its strong course in the morning hours. Growing concerns over an Iran war also caused investors to exit some emerging market economies, signaling that the environment of uncertainty may continue.

News Source: 12punto