The brief period of market relief that followed the provisional agreement between Tehran and Washington appears to be over. Renewed tensions in the Middle East, Donald Trump’s declaration that the Iran ceasefire is “over” and fresh trade threats against Spain have shaken global markets, sending stocks lower, oil prices sharply higher and bond yields to their highest levels in weeks.
On Tuesday evening, the United States launched a series of strikes against Iran in retaliation for attacks on three commercial ships passing through the Strait of Hormuz. At the same time, the US Treasury Department revoked the licence that had allowed Iran to export oil to international markets.
Trump escalated the rhetoric on Wednesday from the NATO Summit in Ankara. He described Iran’s leadership in highly aggressive terms and said the truce was effectively over, although he also suggested that negotiations could continue.
Spain also came under attack. Trump accused Madrid of failing to meet NATO defence-spending expectations and said he had instructed Treasury Secretary Scott Bessent to suspend trade with Spain, adding another front of uncertainty for investors already unnerved by the Middle East escalation.
Sharp sell-off in European markets
European markets came under heavy pressure. The pan-European Stoxx 600 index fell by around 1.6%, Germany’s DAX dropped more than 2%, London’s FTSE 100 slipped by about 1.4%, France’s CAC 40 lost nearly 2%, and Milan’s FTSE MIB also moved lower.
Madrid was hit particularly hard following Trump’s trade threat. The IBEX 35 fell by almost 2.5%, with Banco Santander down more than 4% and BBVA also lower. Acerinox, which has significant operations in the United States, also recorded sharp losses.
Athens Stock Exchange loses nearly 3%
The Athens Stock Exchange was also swept up in the international sell-off, despite the resilience it has shown in recent sessions and after a four-day winning streak that ended on Tuesday.
The General Index fell by nearly 3%, trading around 2,467 points, while the large-cap and banking indices dropped by more than 3%. The mid-cap index also moved lower.
PPC, Piraeus Bank, Alpha Bank, Eurobank, National Bank of Greece, Metlen, GEK TERNA, OTE, Aktor and Allwyn were among the stocks under pressure, with losses ranging from around 2.5% to more than 4%.
Wall Street set for lower open
US stock futures also pointed to a sharply lower open. Dow Jones futures fell by more than 500 points, while S&P 500 and Nasdaq 100 futures also declined, as investors reassessed the risk of renewed conflict in the Middle East and the inflationary impact of higher energy prices.
Asian markets were mixed rather than uniformly negative. Japan’s Nikkei 225 and South Korea’s KOSPI fell sharply, hit in part by pressure on technology and chip stocks. Hong Kong’s Hang Seng, however, rose, while Shanghai was little changed.
Oil jumps, while gold, silver, copper and Bitcoin fall
Oil prices surged as traders reacted to the renewed Middle East escalation and the revocation of the US licence that had allowed Iran to export oil. Brent crude climbed towards $80 a barrel, rising by more than 5%, while West Texas Intermediate also moved sharply higher.
Gold, however, fell despite the geopolitical turmoil. Spot gold dropped by more than 1%, while US gold futures also declined, as the rise in oil prices revived concerns about inflation and increased expectations that the Federal Reserve may keep monetary policy tighter for longer.
Although gold is traditionally seen as a hedge in times of crisis, higher interest rates tend to weigh on the metal because it does not offer a yield.
Silver and copper also moved lower, while Bitcoin fell by more than 3%, dropping below $62,000. Other major cryptocurrencies were also under pressure, with Ether and Solana posting losses.
Bond yields hit four-week highs
Government bond yields rose sharply as investors priced in the risk that higher oil prices could feed inflation and delay any shift towards looser monetary policy.
The yield on the 10-year US Treasury rose to around 4.58%. Germany’s 10-year Bund yield also climbed, while the 10-year UK gilt yield reached its highest level in about four weeks.
Trump’s comments on Iran accelerated a bond sell-off that had already begun after the new military escalation in the Middle East and the jump in oil prices. Markets are now watching the Federal Reserve closely, with traders increasingly focused on whether inflation risks could force policymakers into a more hawkish stance.
Source: newmoney.gr
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