Quick ceasefire hopes dashed? Trump’s speech shocks the market: crude oil and the dollar rise together, Asia-Pacific stocks turn lower

Beijing time Thursday morning, as U.S. President Trump delivered a nationwide address, global financial markets were shaken: Asia-Pacific stocks fell, the U.S. dollar strengthened, and oil prices surged. Trump’s speech shattered investors’ hopes for a rapid de-escalation between the U.S. and Iran.

According to reports from media outlets including CCTV News, on the evening of April 1, local time, Trump delivered a speech, claiming on his own that he had achieved “rapid, decisive, overwhelming victory” in the war with Iran. The core strategic goal of the U.S. in the war with Iran—“nearly completed.”

Trump also said that the next few weeks will see a more intense firepower strike against Iran. He also threatened that if an agreement could not be reached, the U.S. would carry out fierce attacks on all of Iran’s power plants.

Trump’s speech rattles the market

These remarks by Trump dashed investors’ optimism that the war would end quickly. The day before (the 31st), Trump was still at the White House saying that the U.S. would end the war with Iran within “two to three weeks,” and that an agreement with Iran might be reached before then.

In the past few days, the prospect that the Iran war might end boosted global stock markets and pushed the U.S. dollar back down from its high levels. Before that, however, the spike in oil prices had caused risk assets to plunge.

Trump’s latest address reversed the direction of financial markets.

Asia-Pacific stocks turned from gains to losses, with Japanese and South Korean markets leading the decline. The Nikkei 225 opened up 0.61%; as of the time of publication, it was down 1.77%, at 52,786.23 points. The Korea Composite Index opened up 1.3%; as of the time of publication, it was down 3.62%, at 5,280.39 points.

Meanwhile, U.S. stock index futures also fell sharply. As of the time of publication, Dow Jones Industrial Average futures were down 0.97%; S&P 500 index futures were down 1.12%; and Nasdaq 100 index futures were down 1.35%.

During volatile times, the U.S. dollar has long been investors’ go-to safe-haven currency. After Trump delivered his speech, the U.S. dollar rose against most currencies. As of now, the U.S. Dollar Index is up 0.39%.

International oil prices surged sharply. As of now, U.S. West Texas Intermediate (WTI) crude oil futures were up 3.82% to $103.94 per barrel. International benchmark Brent crude oil futures were up 4.61% to $105.82 per barrel.

Analysts and investors are closely watching when and how the strategic energy transportation chokepoint, the Strait of Hormuz, will be reopened, in order to ease the severe supply shock facing Asian economies.

Regarding the Strait of Hormuz, in remarks on April 1, Trump said the U.S. almost does not need to import oil through the Strait of Hormuz, and that countries that need to obtain oil via the Strait must “take responsibility for maintaining this corridor themselves.” Trump urged these countries to either “buy oil from the U.S.” or summon courage and go directly to the Strait of Hormuz to “snatch oil.” He said that when the war with Iran ends, the strait “will naturally open.”

Quick take from international institutions

Some international institutions quickly offered their views on Trump’s remarks. A report by Nomura Securities said that Trump’s speech did not send clear signals to cool the situation as the market had hoped.

Robert Subbaraman, head of global market research at the firm, said that in the foreign exchange market, we may see Asian currencies weaken versus the U.S. dollar; if volatility is too fast, central banks in various countries may step up intervention. He said this could provide upside momentum for government bond yields.

Overseas Chinese Banking Corporation in Singapore (OCBC Bank) also expressed a similar view, saying that Trump’s speech reduced hopes for a rapid end to the war, prompting the market to prepare for further escalation in the near term, higher oil prices, and a stronger dollar.

Jumpei Tanaka, head of investment strategy at Pictet Asset Management Japan Ltd., said, “Trump’s speech is not as the market expected—that is, it does not convey a signal that the conflict is about to end. Instead, he suggests that the situation may escalate. His comments are interpreted as a negative factor for the stock market.”

Dilin Wu, a research strategist at Pepperstone Group, was blunt as well, saying Trump’s speech “is indeed disappointing.” She pointed out that Trump’s earlier remarks about withdrawing troops from the Middle East now seem more like a way to calm the market while also keeping pressure options on the table. “He clearly still favors a ‘pressure-first’ strategy rather than a straightforward cooling down.”

Nick Twidale, chief market analyst at ATGlobalMarkets, said the market is eager for clear information on when the conflict will end, but Trump’s speech has brought more uncertainty.

“Investors obviously don’t buy into that. I think global markets may see further declines today. Even though he claims the war will end soon, the key message he delivered—that he will strike Iran in the next few weeks—is extremely negative for the market. This means the war may continue.” He said.

（Source: Caixin Finance (财联社)）