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

Bloomberg News, April 2 (Editor: Bian Chun) — On Thursday morning Beijing time, as U.S. President Trump delivered a nationwide address, global financial markets were shaken: Asia-Pacific stocks fell, the dollar strengthened, and oil prices rose. Trump’s speech shattered investors’ hopes for a quick ceasefire between the U.S. and Iran.

According to reports from CCTV News and other media outlets, on the evening of April 1 local time, Trump delivered a speech, claiming victory for a “quick, decisive, and overwhelming victory” in the Iran conflict. The core strategic goal of the U.S. in the Iran war is “close to completion.”

Trump also stated that in the coming weeks, there will be stronger military strikes against Iran. He also threatened that if an agreement cannot be reached, the U.S. will launch fierce attacks on all of Iran’s power plants.

Trump’s speech shocks the markets

Trump’s remarks dampened investors’ optimism about a quick end to the war. Just the day before (March 31), Trump had stated at the White House that the U.S. would end the Iran conflict within “two to three weeks,” possibly reaching an agreement with Iran beforehand.

In recent days, the prospect of an end to the Iran conflict boosted global stock markets and caused the dollar to retreat from its highs. Prior to that, soaring oil prices had led risk assets into a sharp decline.

Trump’s latest speech reversed the trend in financial markets.

Asia-Pacific stocks turned from gains to losses, with Japan and South Korea leading the decline. The Nikkei 225 index opened up 0.61%, but as of press time, it was down 1.77%, at 52,786.23 points. The Korea Composite Stock Price Index (KOSPI) opened 1.3% higher but has fallen 3.62% to 5,280.39 points as of press time.

Meanwhile, the three major U.S. stock index futures also declined sharply. As of press time, Dow Jones Industrial Average futures fell 0.97%; S&P 500 futures dropped 1.12%, and Nasdaq 100 futures declined 1.35%.

During turbulent times, the dollar has been the preferred safe-haven currency for investors. After Trump’s speech, the dollar rose against most currencies. Currently, the dollar index is up 0.39%.

Oil prices surged significantly. As of now, U.S. West Texas Intermediate (WTI) crude futures rose 3.82% to $103.94 per barrel. International benchmark Brent crude increased 4.61% to $105.82 per barrel.

Analysts and investors are closely watching when and how the Strait of Hormuz, a critical energy transit chokepoint, will reopen to ease the severe supply shocks faced by Asian economies.

Regarding the Strait of Hormuz, Trump stated in his April 1 speech that the U.S. almost does not need to import oil through the Strait. Countries that need to access oil via the Strait must “take responsibility for maintaining this passage.” Trump urged these countries either to “buy oil from the U.S.” or to muster the courage to “grab oil” directly at the Strait of Hormuz. He said that when the Iran conflict ends, the strait “will naturally reopen.”

International agencies’ quick comments

Some international organizations quickly responded to Trump’s speech. Nomura Securities commented that Trump’s speech did not send a clear signal of de-escalation as the market had hoped.

Robert Subbaraman, Nomura’s Global Market Research Director, said that in the foreign exchange market, we might see Asian currencies weaken against the dollar. If volatility is too rapid, central banks may increase intervention. He added that this could push up government bond yields.

OCBC Bank in Singapore also expressed similar views, stating that Trump’s speech reduced hopes for a quick end to the war and prepared markets for further escalation, rising oil prices, and a stronger dollar in the short term.

Nick Twidale, Chief Market Analyst at AT Global Markets, said, “Investors are clearly not buying it. There could be more downside in global markets today. Despite his statement that the war is ending soon, the key message — that Iran will be targeted in the coming weeks — is extremely negative for the markets.”

Dilin Wu, Research Strategist at Pepperstone Group, bluntly said that Trump’s speech was “indeed disappointing.” She pointed out that Trump’s earlier comments about withdrawing from the Middle East “now seem more like an attempt to soothe markets while keeping pressure options open.” “He clearly still leans toward a strategy of pressure first, then easing, rather than straightforward de-escalation.”