With 24 hours left on Trump's ultimatum, Bessant said to

# Zhao Ying, Ye Zhen

Source: Wall Street CN

The Middle East situation escalated sharply over the weekend, followed by U.S. Treasury Secretary Bessent’s remark that “escalation must come before de-escalation.” Asian stock markets plunged across the board on Monday, with the Nikkei falling as much as 5% and South Korea’s KOSPI triggering a circuit breaker. Gold dropped more than 3% at one point, while WTI crude briefly broke above $100 before quickly retreating.

On Monday, the Middle East geopolitical situation flared up over the weekend, and U.S. Treasury Secretary Bessent subsequently stated that “escalation must come before de-escalation.” Global markets came under pressure at Monday’s open, with Asian stock markets slumping before paring losses.

According to The Paper, when asked about the Iran situation and whether President Trump intended to de-escalate tensions during an interview on March 22, Bessent said the U.S. was destroying various Iranian facilities and noted that sometimes “escalation must come before de-escalation.” He also explicitly stated that “all options are on the table,” including deploying U.S. troops to seize Kharg Island, Iran’s oil hub.

The Middle East geopolitical situation escalated sharply over the weekend. According to CCTV News, in a post on the social media platform Truth Social on March 21 local time, U.S. President Trump demanded that Iran fully reopen the Strait of Hormuz within 48 hours, or the U.S. would strike and destroy various power plants across Iran, “starting with the largest one.”

The MSCI Asia Pacific Index fell 3% to 230.88 points, with major stock indexes paring losses after Monday’s opening.

The Nikkei 225 Index fell as much as 5%, dropping below the 51,000-point mark, and is currently down about 3%. Futures on Japan’s TSE Growth Market 250 Index also triggered a circuit breaker mechanism, resuming trading at 9:40 a.m. local time.

Japanese government bond yields rose again on Monday, approaching multi-decade highs. The 30-year bond yield climbed 6 basis points to 3.58%, the highest since February 9.

The South Korean market saw particularly steep declines. The Seoul Composite Index fell more than 6% at one point, and the Korea Exchange activated a circuit breaker after the KOSPI 200 futures dropped 5%, suspending program trading for five minutes.

The South Korean won depreciated sharply against the U.S. dollar, falling to its lowest level since March 10, 2009, indicating a significant rise in capital outflow pressure. Singapore’s Straits Times Index fell 2.2%.

European Stoxx 50 index futures fell 1.1%, and Germany’s DAX futures dropped 1.3%, showing that risk aversion is spreading to Western markets.

Precious metals moved lower in tandem with stock markets. Spot gold fell more than 3% at one point, currently trading at $4,415 per ounce; spot silver dropped more than 4% during the day, now at $64.87 per ounce.

The oil market showed conflicting performance. WTI crude briefly rebounded above $100 in early trading but then retreated from its opening high; Brent crude also edged lower from Friday’s highs.

### Volatile Market Performance

Over the weekend, the Middle East conflict underwent a sharp shift from “de-escalation” to threats and rhetoric of “total destruction.”

In the early hours of March 22 local time, Iran’s Islamic Revolutionary Guard Corps’ Khatam al-Anbiya Central Command warned that, in line with previous warnings, if Iran’s fuel and energy infrastructure were attacked, all energy infrastructure, information technology systems, and desalination facilities belonging to the U.S. and its allies in the region would become targets.

Amid fierce rhetorical exchanges between the conflicting parties over the weekend and the impending expiration of President Trump’s 48-hour ultimatum on Monday evening Eastern Time, crude oil prices surged in early trading, while U.S. stock futures fell sharply.

Market reactions were intense in early Asian trading on Monday. WTI crude briefly rebounded above $100 in early trading but then retreated from its opening high; Brent crude also edged lower from Friday’s highs.

However, after the initial knee-jerk reaction, both oil prices and stock index futures recovered some of their volatility and are now hovering near flat levels, highlighting deep market hesitation and indecision as it assesses the duration of the war and its potential economic consequences.

### Goldman Sachs: Everything Depends on How Long the War Lasts

According to Goldman Sachs’ Kapa analysis, the core contradiction in current market pricing is that while the interest rate shock has been largely priced in, the pricing of growth risks remains limited. This contrasts with the 2022 energy shock, when real yields surged sharply from negative levels, delivering a larger negative interest rate shock.

PREVIOUS：Oil price expectations raised again! Goldman NEXT：Iran hits cartel helium exports hard, global