Straight-line plunge! A 1,800-point drop during trading! Hedge funds face severe drawdowns!

Trump’s latest remarks about a potential war with Iran have “disappointed” global markets!

On the morning of April 2, Beijing time, after U.S. President Trump delivered remarks, Japan and South Korea’s stock markets saw a sharp plunge in a matter of moments. Among them, South Korea’s KOSPI index fell by more than 4% during the trading session, after having risen 1.75% earlier. The Nikkei 225 index dropped by more than 2%, after having climbed close to 1% previously. From the intraday high to the low, the Nikkei 225 plunged by nearly 1,800 points.

U.S. stock index futures also tumbled sharply. Nasdaq index futures and S&P 500 index futures fell by more than 1%, while Dow Jones index futures fell by 0.91%. The U.S. dollar and oil prices, meanwhile, surged significantly. As of the time of writing, Brent crude rose more than 5%, and WTI crude rose more than 4%. The U.S. Dollar Index was up 0.45% during the day, reclaiming the level above 100.

Earlier, in his speech, Trump said that within the next two to three weeks, the U.S. would carry out extremely fierce firepower strikes against Iran. He also said that if an agreement could not be reached, the U.S. would launch fierce strikes against all of Iran’s power plants. Some analysts said Trump’s speech was “disappointing,” and investors are worried that the situation could escalate further.

It is worth noting that, affected by market volatility triggered by the Iran war, global hedge funds experienced their worst monthly drawdown since January 2022 in March.

**Broad-based selloff in Japanese and Korean stocks **

During today’s trading session, Japan and South Korea’s stock markets saw a sharp selloff. As of the time of writing, South Korea’s KOSPI index was down 221 points, a decline of 4.05%. The Nikkei 225 index was down 1,146 points, a drop of 2.13%.

Chip-related stocks plunged sharply. SK hynix, Samsung Electronics, and Advantest fell by more than 5%. Hanmi Semiconductor and Kioxia, as well as KYOCERA Semiconductor, fell by more than 4%, and Renesas Electronics fell by more than 3%.

In his latest remarks, Trump reiterated the view that the U.S. is about to complete its objectives, but also said that the war has not yet ended. In the speech, Trump said, “Within the next two to three weeks, we will carry out extremely fierce strikes against them… At the same time, negotiations are also underway.”

Trump also said that if Iran does not reach an agreement with the U.S. within the next two to three weeks, U.S. forces will target Iran’s key objectives—“striking extremely fiercely at every single one of their power plants,”—and may also strike Iran’s oil facilities. Regarding the Strait of Hormuz, Trump said the U.S. “almost” does not need to import oil via the Strait of Hormuz; countries that need to obtain oil through the Strait must “take care of maintaining this passage themselves.”

Bank of Overseas Chinese Holdings said Trump’s remarks reduced hopes that the war would end quickly, prompting the market to prepare for a further escalation of the situation in the near term, higher oil prices, and a stronger U.S. dollar. Moh Siong Sim, an FX strategist at the bank, said, “Sustained high oil prices shift inflation concerns into growth concerns, which could not only start weighing on currencies of risk-sensitive energy-importing countries such as the New Zealand dollar, the British pound, and the Swedish krona, but may also spill over to currencies of risk-sensitive energy-exporting countries such as the Australian dollar and the Norwegian krone.”

According to information from Iran, minutes after Trump claimed to have destroyed Iran’s missile system and defense system, Iran fired missiles at Israel’s northern region.

According to a report from CCTV News, Iran announced on April 1 that it deployed several drone formations to attack the U.S. Navy’s “Lincoln” aircraft carrier strike group in the Indian Ocean. Satellite images showed that the formation had withdrawn from its original position and moved deeper into the Indian Ocean.

Hedge funds suffer a major pullback

In Goldman Sachs’ client report on Wednesday, it said that global hedge funds faced their worst monthly drawdown since January 2022 last month, hit by market volatility stemming from the Iran war that battered stocks and dragged down the performance of the world’s largest asset management companies.

Hedge funds typically aim to outperform the market and generate excess returns to justify their fees, but in the first quarter this year, multiple strategies were severely hit. During the period, the S&P 500 fell 4.63% and the Nasdaq 100 fell 4.87%. For hedge funds that achieved stellar performance in 2025, this was a fall back into reality.

Bruno Schneider, managing partner at multi-family office Erlen Capital Management, in comments on the whole industry (not specifically on data for Goldman Sachs), said, “March 2026 was one of the biggest months in recent years of challenges for the hedge fund industry. Increased volatility is the result of a combination of multiple factors—rising geopolitical tensions, especially in the Middle East involving developments related to Iran escalation, while interest rates, currency, commodities, and equity factor rotations also changed rapidly.”

Goldman Sachs’ report noted that this drawdown—i.e., the decline in fund value from the peak to the trough—was the largest since January 2022, when investors’ focus was on concerns about the market’s increasingly hawkish view of the Federal Reserve stance and geopolitical tensions.

According to a Reuters report, based on Goldman’s prime brokerage report, all regional long/short strategy funds suffered negative returns, with Asian funds seeing the largest drop at 7.3%, while European funds fell 6.3%. U.S. funds fell an average of 4.3% in March. Goldman said that as of March 31, year-to-date, Asian, European, and U.S. long/short strategy funds were up 6.5%, down 1.8%, and down 2.4%, respectively.

Goldman said that the technology, media, and telecommunications sectors were the hardest hit. In March, long/short strategy funds fell 7.8%, and in the first quarter they fell 11.8%. Healthcare sector funds fell by about 0.9% in March.

Goldman’s report also pointed out that hedge funds have been net selling global equities for the fourth consecutive month, and the pace of selling was the fastest in 13 years. In addition, in March, the equal-weighted long/short return and the median long/short return fell by 3.96% and 4.77%, respectively, indicating that larger multi-manager funds lagged in performance that month.

（Source: Securities Times China）