Global financial markets showed signs of caution on Thursday after US President Donald Trump adopted a more aggressive stance on the ongoing conflict with Iran. This shift in tone erased earlier optimism that the war could soon come to an end.
Stocks declined across major regions, the US dollar gained strength, and oil prices moved higher as investors reacted to the growing uncertainty.
Trump Signals Possible Escalation
In a primetime speech, Trump stated that Washington’s “core strategic objectives” in the war were close to being achieved. However, he did not provide any clear roadmap for reducing tensions.
Instead, he issued a strong warning, saying the US could strike Iran “extremely hard” over the next two to three weeks. This statement raised fresh concerns that the conflict, which has already lasted over a month, could intensify further.
Investor Sentiment Reverses Quickly
The tougher rhetoric unsettled global investors. Just days earlier, markets had shown signs of recovery due to hopes of a diplomatic solution. During that brief period, stock markets had risen while the dollar had weakened.
However, Trump’s latest remarks reversed this trend, bringing back fear and uncertainty into the markets.
Oil Prices Surge on Supply Concerns
Oil markets reacted strongly to the rising geopolitical risk. Brent crude prices jumped more than 3 percent, reaching around $104.75 per barrel after briefly crossing $105.
Traders are increasingly worried about possible disruptions in oil supply, especially given the strategic importance of the region in global energy distribution.
Stock Markets Fall Across Regions
Equity markets came under pressure worldwide. Futures linked to the S&P 500 dropped by about 0.67 percent. In Europe, futures tracking the Stoxx Europe 600 declined by 0.1 percent.
Asian markets also saw losses. The MSCI Asia-Pacific Index fell by 0.75 percent. Meanwhile, Japan’s Nikkei 225 erased earlier gains and ended lower by 0.79 percent in volatile trading conditions.
Dollar Strengthens as Safe-Haven Demand Rises
The US dollar strengthened against major currencies as investors moved towards safer assets. The euro slipped by 0.25 percent to $1.156, reflecting renewed demand for the dollar during uncertain times.
Focus Shifts to Strait of Hormuz
Market attention has increasingly turned to the Strait of Hormuz, a crucial passage that handles nearly one-fifth of the world’s oil and liquefied natural gas supplies.
Any disruption in this region is considered a major threat, particularly for Asian economies that rely heavily on energy imports.
Rising Attacks Add to Supply Fears
Iran has intensified its attacks targeting Gulf nations, some of which host US military bases. It has also used its strategic position near the Strait of Hormuz to increase pressure during the conflict.
These developments have already caused supply disruptions, pushing energy prices higher throughout March. As a result, concerns about rising global inflation and slower economic growth have increased.