Trump threatened to escalate the war against Iraq, Brent oil rose 7%, global stock markets fell, gold fell below 4600, and silver fell over 5% during the day

# Bao Yilong, Zhang Yaqi

Source: Wallstreetcn

Japan's TOPIX index widened its losses to 1.7%, while the Korea Exchange triggered a **circuit breaker** on the KOSDAQ index, halting program trading for 5 minutes, after the KOSDAQ 150 index futures plunged 6%. Euro Stoxx 50 futures fell 2%, and S&P 500 futures dropped 1.3%. Brent crude futures surged more than 6.9% at one point, breaking through $108 per barrel, while WTI crude rose over 5% to $105.30. Spot silver tumbled 5.5% on the day to $70.92 per ounce.

Trump's speech on the Middle East conflict, in which he threatened to **escalate strikes on Iran sharply over the next two to three weeks**, swiftly dashed market optimism that tensions would ease. This drove international oil prices sharply higher, pulled global stock markets lower, and sparked a broad rise in cross-asset volatility.

On Thursday, Brent crude futures surged more than 6.9%, breaking through $108 per barrel, while WTI crude rose over 5% to $105.30. The Asia Stock Index fell 2.2%. The Korea Exchange triggered a circuit breaker on the KOSDAQ index, pausing program trading for 5 minutes, after KOSDAQ 150 index futures dropped 6%. S&P 500 futures fell 1.3%, and Euro Stoxx 50 futures declined 2%, putting global stock markets' two-day rally—fueled by hopes of de-escalation—at risk of reversal.

According to Xinhua News Agency, Trump claimed in his speech that the U.S. had achieved a **"rapid, decisive, and overwhelming victory"** in its military campaign against Iran. He stated that Washington's core strategic objectives in the conflict were "nearly complete" and that all military goals could be accomplished "in a very short period of time."

**"Over the next two to three weeks, we will hit them with enormous force... At the same time, negotiations are ongoing,"** Trump said.

**Jumpei Tanaka**, chief investment strategist at Pictet Asset Management Japan Ltd., commented: **"Trump's speech was not what the market hoped for—a signal pointing to the end of the conflict. Instead, it suggested potential escalation, which the market interpreted as negative for equities."**

The Asia Stock Index fell 2.2%. Japan's TOPIX index dropped 1.7%. The Korea Exchange halted KOSDAQ program trading for 5 minutes after KOSDAQ 150 futures fell 6%. India's Sensex and Nifty indexes both slid about 2%, and Pakistan's KSE-100 index tumbled 3.2%.

Euro Stoxx 50 futures fell 2%, and S&P 500 futures dropped 1.3%.

The benchmark 10-year U.S. Treasury yield rose 6 basis points to 4.37%, with bond prices falling as inflation worries intensified.

The Indian rupee strengthened 1.7% against the U.S. dollar, bucking the trend.

Gold and silver failed to benefit from safe-haven flows. Gold fell below $4,600, and spot silver plunged 5.5% to $70.92 per ounce.

Brent crude surged more than 6.9% to above $108 a barrel, while WTI rose over 5% to $105.30.

Bitcoin fell 2.6% to around $66,400.

### Stocks Retreat as Markets Fail to Get Clear Signal

Prior to Trump's address, earlier remarks suggesting the war could end **"within two to three weeks"** had boosted expectations, sparking a two-day global stock rally. However, the speech quickly drained optimism.

The Asia Stock Index fell 2.2%. India's Sensex and Nifty indexes dropped about 2%, and Pakistan's KSE-100 index slid 3.2%. Euro Stoxx 50 futures fell 2%, and S&P 500 futures declined 1.3%. The Korea Exchange triggered a KOSDAQ circuit breaker, suspending program trading for 5 minutes after KOSDAQ 150 futures fell 6%.

**Nick Twidale**, chief market analyst at AT Global Markets, stated: **"The market desperately wanted a clear signal on when the conflict would end. Instead, this speech added more uncertainty. Investors are clearly disappointed, and global markets may face further downward pressure today."**

**Ken Wong**, Asian equity portfolio specialist at Eastspring Investments Hong Kong Ltd., noted: **"While everyone wants to move past this quickly, there is still much to digest from the past month's Middle East developments. The key question is how much of a ripple effect these events will have on the global economy over the coming quarters."**

### Risk Aversion Rises, Dollar Strengthens, Gold Pressured

Cross-asset volatility surged across the board after the speech. The dollar strengthened on safe-haven demand during wartime, solidifying its status as the preferred refuge currency. The 10-year U.S. Treasury yield rose 6 basis points to 4.37%, with bond prices falling on intensifying inflation concerns.

Precious metals failed to catch a safe-haven bid. Gold dropped about 2% to around $4,660 an ounce, and silver tumbled 4.4%. Bitcoin fell 2.6% to roughly $66,400.

The Indian rupee rose 1.7% against the dollar, after the Reserve Bank of India intervened to curb speculative trading, although Indian government bond prices fell in tandem.

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