Thursday, April 2, 2026 - Markets recoiled on Thursday as war jitters over Iran deepened, with stocks sliding, oil surging and the dollar firming after U.S. President Donald Trump dashed hopes for clarity on when the Middle East conflict might end.
Trump said in a prime-time address that the U.S. would hit Iran "extremely hard" within weeks, claiming military goals were nearly achieved and the conflict was close to ending.
According to Reuters, The front-month Brent contract for June jumped about 5% to $106.16 per barrel after investors found little reassurance in the speech, which failed to spell out when or how the Strait of Hormuz - a critical fuel shipping route - would reopen to ease supply disruptions hitting Asia hard.
"We have no
additional certainty or clarity around timeline from this address and
this is what the market was looking for," said Jon Withaar, senior
portfolio manager at Pictet Asset Management in Singapore.
"The fact that we
can expect 2-3 more weeks of action, boots on the ground were not ruled out
and that threats to hit infrastructure were reiterated will put the market
back on the defensive, particularly as we come into the long weekend."
The prospect of the end
to the month-long U.S.-Israeli war with Iran lifted global stocks and knocked
the dollar off its recent highs in the past two sessions after a brutal March
where soaring oil prices sent risk assets into a tailspin.
In the immediate
aftermath of the speech, however, investors were back to selling almost
everything except the U.S. dollar and sending oil prices higher.
U.S. stock futures slid 1% while European futures sank over
1.5%. Asian stocks were clobbered, with Japan's Nikkei (.N225), opens new tab down 1.8% and South Korea's Kospi
index (.KS11), opens new tab sliding 3.6%.
MSCI's broadest index of Asia-Pacific shares outside
Japan (.MIAPJ0000PUS), opens new tab was down over
1.5%, with almost all bourses in Asia in the red.
"The only thing that
really matters is whether the Strait of Hormuz will open soon. Trump's speech
doesn't imply this is likely to happen as quickly as the markets were
expecting," said Prashan Newnaha, senior rates strategist at TD
Securities.
A report from the
OECD this Thursday downgraded its global growth forecast from 3.3% to 2.9% in
2026, as soaring energy prices send inflation in the G20 countries up by 1.2
percentage points.
Trump said the United
States does not need the key oil gateway and that it will open naturally once
the conflict is over.
Iran has fired repeatedly
on Gulf countries, some of which are home to U.S. bases, and is using the
strait as leverage.
"His comments on
the duration of other wars was notable, in that even if the war with Iran
lasts a few months, it's not as long as prior wars," said
Newnaha.
"Expect USD and oil
to move higher while risk is shed."
Trump's comments also
rekindled concerns over stagflation, the toxic mix of high inflation and weak
growth that roiled markets in March.
The U.S. dollar has been
the haven of choice among investors during the tumult and the greenback
rose against most currencies following the speech. The euro weakened 0.25% to
$1.156.
The dollar index , which
measures the U.S. currency against six other units, was 0.3% higher at 99.858
after dropping nearly 1% in the past two days on optimism of an end to the war
soon.
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