Oil rose sharply, and US and European stocks fell after US President Donald Trump said in his first national address since the Iran war began that the US would continue to hit Iran and "finish the job".
Instead of declaring victory or offering clarity on his strategy in the Iran war, the US president promised fresh attacks over the next two to three weeks, reviving fears of rising inflation and slowing economic growth.
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Dampened hopes for an end to the war in Iran weighed on stock markets worldwide and gave oil prices a fresh boost early on Thursday. In a rare move, the US benchmark, WTI crude, traded above Brent crude — the global seaborne benchmark and the one most affected by the Iran conflict so far.
“The fact that traders are now prepared to pay a premium for WTI suggests they are becoming worried about the deliverability of seaborne oil — Brent — and scrambling for what they see as a more reliable option, namely WTI,” said Russ Mould, investment director at AJ Bell.
“This, in turn, suggests traders are starting to position themselves for a conflict that is longer and more drawn out than hoped.”
Nearing 3 p.m. CET, WTI was up 11.5%, at over $111 per barrel, while Brent front-month futures traded at $108.90 per barrel, up more than 7.6%.
In his prime-time speech to Americans, Donald Trump said, “We are going to hit them extremely hard over the next two to three weeks. We’re going to bring them back to the Stone Ages, where they belong.”
The US president promised further strikes on energy facilities if no deal was reached with Tehran. Trump also said that the United States would “finish the job” in Iran soon, as “core strategic objectives are nearing completion” and military operations could wrap up shortly.
Trump did not mention a looming deadline he set for Iran to open the Strait of Hormuz, the critical waterway for global oil and gas transport, after he had earlier threatened US attacks on its energy infrastructure if the strait was not reopened. He did not offer a clear path to ending the supply disruptions that have sent energy prices soaring.
“The market has shown disappointment because the speech President Trump made was far less than what the market expected," said Takashi Hiroki, chief strategist at Monex in Tokyo. "There were no concrete details about the end of the hostilities with Iran.”
“What the market wants is a clear outline for the ceasefire," he said.
How did leading stock markets react?
European stock indices opened lower on Thursday morning and were unable to recover over the following hours. By early afternoon, London’s FTSE was down 0.4%, Paris’s CAC 40 had fallen 1%, while Frankfurt’s DAX had slipped 1.8%. Key indices in Milan and Madrid were down 1.2% and 1.1%, respectively, at that time.
The best-performing stocks included ENI S.p.A., whose share price was up nearly 4% at around 1 pm CET, while TotalEnergies was trading more than 2.8% higher. At the same time, Deutsche Telekom was down 5.8%, and Schneider Electric, Infineon Technologies and Deutsche Bank were also among the worst-performing stocks, each falling between 3.7% and 5%.
The euro lost nearly 0.7% against the US dollar, with the exchange rate at 1.1513.
In Asia, leading stock indices also closed the day with significant losses. Tokyo’s Nikkei 225 was down 2.4%, while South Korea’s Kospi fell 4.5%.
Hong Kong’s Hang Seng declined by 1.1%, while the Shanghai Composite Index was down 0.7%.
US futures were down between 1.1% and 1.6%.
Gold and silver prices also fell. Gold was down 3.4% at $4,651.40 per ounce, while silver lost 6.6% to $71.60 per ounce.
