Just now! Israel launches massive airstrikes! Crude oil surges, US stocks plunge across the board!

Tensions in the Middle East continue to escalate, causing increased volatility in global financial markets.

Overnight, U.S. stocks plummeted across the board, with all three major indices falling more than 1%. Large technology stocks declined broadly, and international oil prices surged sharply. By the close of trading, WTI crude oil futures and Brent crude futures both rose over 9%. Analysts point out that the escalation of conflict in the Middle East has triggered a sell-off in the U.S. stock market, as investors worry that the resolution of the conflict could be further delayed. Additionally, due to the ongoing surge in oil prices, markets are rapidly realizing that the likelihood of a Fed rate cut later this year is decreasing.

Regarding the situation, according to CCTV News, on the evening of March 12 local time, the Israel Defense Forces announced the start of large-scale attacks on infrastructure in Tehran, Iran’s capital. The U.S. Central Command stated on the 12th local time that a U.S. KC-135 aerial refueling aircraft crashed in western Iraq during the period of U.S.-Israel military strikes against Iran. The Central Command clarified that the incident was not caused by enemy fire or friendly fire.

U.S. stocks tumble across the board

On March 12 Eastern Time, U.S. stocks saw a broad sell-off, with the Dow dropping over 739 points, down 1.56%; the Nasdaq fell 1.78%; and the S&P 500 declined 1.52%. Aside from the energy sector and some defensive stocks, most sectors experienced heavy selling.

Large tech stocks in the U.S. also declined broadly, with Tesla dropping over 3%, Meta down more than 2%, and Nvidia, Apple, Amazon, and Google each falling over 1%. Microsoft closed slightly lower.

Most popular Chinese concept stocks also declined, with the Nasdaq Golden Dragon China Index down 1.03%. Xiaopeng Motors fell 4.7%, Li Auto dropped over 2%, Alibaba and Pinduoduo declined over 1%. NIO rose over 1%, Xpeng Motors gained over 3%, and Fangdd Network soared over 16%.

On the news front, the first statement from Iran’s new Supreme Leader shattered hopes for a quick de-escalation, causing crude oil prices to surge close to $100 per barrel, intensifying inflation concerns and prompting a large-scale sell-off of stocks.

Ryan Detrick, Chief Market Strategist at Carson Group, said that the market has realized that the resolution of Middle East conflicts could be further delayed. Currently, the market’s sentiment is to sell first and consider fundamentals later. Apart from the energy sector, almost no other sectors are truly safe.

Oil prices surged again. By the close, April WTI crude futures on NYMEX rose 9.72% to $95.73 per barrel; May Brent crude futures on ICE increased 9.22% to $100.46 per barrel.

Iran’s new Supreme Leader, Mujtaba Khamenei, stated that Iran will continue to adopt strategic measures, including blocking the Strait of Hormuz, and will attack U.S. military bases in the Middle East.

Meanwhile, the International Energy Agency (IEA) warned that the Iran conflict is causing the largest-ever disruption to oil supplies, heightening fears of rising inflation.

As the Strait of Hormuz’s daily transport volume has sharply decreased from about 20 million barrels before the conflict to near halt, with limited rerouting options and increasing inventories, Gulf countries have reduced oil production by at least 10 million barrels per day. If shipping cannot quickly resume, supply losses could further expand.

White House Press Secretary Karine Jean-Pierre stated on Thursday that the Trump administration is considering a temporary exemption from the century-old Jones Act to ensure the free transportation of energy and agricultural products between U.S. ports.

It is reported that an announcement regarding a 30-day exemption from the Jones Act could be issued as early as Thursday, aiming to address the surge in fuel prices and other supply disruptions since the U.S.-Israel conflict with Iran began.

Trump: Rates should be cut immediately

On March 12 Eastern Time, President Trump again called on Federal Reserve Chair Jerome Powell to cut interest rates, stating that the Fed should act immediately in response to the global economic shocks caused by the Iran conflict.

Trump posted on social media: “Where is Jerome Powell, the Fed Chair who is always too late? He should cut rates immediately, not wait until the next meeting!”

The Fed will hold a monetary policy meeting on March 17. Although recent U.S. inflation data shows overall price increases remain manageable, the tense Middle East situation has significantly driven up oil prices and threatened global supply chains. Public dissatisfaction with living costs is rising, which is not favorable for Republicans’ prospects of maintaining control of Congress in the November midterm elections.

Markets generally expect the Fed to keep the benchmark interest rate unchanged, but their latest economic projections (SEP) will be closely watched for signals of inflation expectations being raised.

Beneath the surface of rising oil prices, markets are realizing that the chances of a Fed rate cut later this year are rapidly diminishing.

Traders have significantly reduced their bets on rate cuts this year. They no longer believe there is a 100% probability of a rate cut in 2026. Interest rate swaps tied to the Fed’s policy meeting date show that traders now expect only a 24 basis point cut this year, down from about 30 basis points expected late Wednesday, which is less than a quarter of a percentage point.

Regarding the situation, according to CCTV News, on the evening of March 12 local time, the Israel Defense Forces announced the start of large-scale attacks on infrastructure in Tehran, Iran’s capital. Around 10:10 PM Tehran time on the 12th, CCTV reporters heard explosions in Tehran, and the air defense systems activated.

Later that evening, Israeli Prime Minister Benjamin Netanyahu held his first press conference since launching large-scale airstrikes against Iran, defending the joint U.S.-Israel military actions.

Netanyahu claimed that after nearly two weeks of U.S.-Israeli airstrikes, Iran has “been fundamentally changed,” with the Iranian Islamic Revolutionary Guard Corps and Basij militia “suffering heavy damage.”

When asked about possible actions against Mujtaba Khamenei and Hezbollah leader Naim Qassem, Netanyahu said he would not “issue a life insurance policy” for them and that he “does not plan to detail plans or actions here.”

He also revealed that he “speaks with Trump every day,” and their exchanges are “frank and open.”