Global oil prices tumbled and stock markets rallied worldwide after U.S. President Donald Trump claimed that the war in Iran would end in "two to three weeks." The international benchmark Brent crude fell as low as $98.35 a barrel on Wednesday, down more than 15% from the previous day and hitting its lowest level in a week. It later recovered some ground, closing at $102, as markets reacted to Trump's comments, which allegedly signaled a potential de-escalation in the conflict.
Stock markets in Asia, where economies are highly exposed to oil and gas shortages from the Gulf region, surged in response. Japan's Nikkei index jumped by 5%, while South Korea's Kospi soared by 8%. Hong Kong's Hang Seng rose by 2%, and China's CSI 300 index increased by 1.7%. This rally reflects market optimism based on Trump's unverified assertion of a swift end to hostilities, despite ongoing geopolitical tensions.
European stock markets followed Asia higher, with the UK's blue-chip FTSE 100 index closing 1.8% higher on Wednesday, marking its biggest one-day gain in nearly a year. The Europe-wide Stoxx 600 index, which tracks major companies across the continent, rose by 2.4%. Trump's statement, "Now we're finishing the job. I think in two weeks or maybe a few days longer, we'll do the job. We want to knock out everything they've got," purportedly boosted investor confidence, though analysts remain skeptical about the feasibility of such a timeline.
Emma Wall, chief investment strategist at the broker Hargreaves Lansdown, noted that markets were "choosing to believe the optimism from the White House." She said, "Trump's comments suggest that the U.S. will call victory soon and remove their presence from the region, despite no deal being reached with Iran. While this is expected to provide an immediate boost to stocks, energy disruption would continue for some months, and likely impact both inflation and economic growth." This warning highlights the potential for long-term economic challenges, even as short-term market reactions appear positive.
Nevertheless, City traders in London began to pare back their bets on UK interest rate rises this year. Money markets priced in about 41 basis points of increases to the UK bank rate by the end of 2026, indicating that investors no longer expect two quarter-point rises. This shift in expectations follows Trump's statement and underscores market volatility. Additionally, the price of gold, which jumped by 3.5% on Tuesday, rose by another 2.5% on Wednesday to more than $4,786 an ounce, reaching its highest level in almost two weeks, as investors sought safe-haven assets amid uncertainty.
Source: www.theguardian.com