Oil prices climbed while global stock markets declined on Wednesday following U.S. President Donald Trump’s comments casting doubt on the temporary peace agreement with Iran. The S&P 500 dropped 0.3%, recovering from an earlier 1.1% decline. The Dow Jones Industrial Average fell 1.1%, and the Nasdaq composite initially slumped but later rose 0.2% after Trump’s statements. Canada’s S&P/TSX index closed the day down about 1%.
In the oil market, the price of Brent crude surged 5.2% to $78.02 US, briefly exceeding $80 US, amid concerns about the conflict potentially disrupting oil shipments through the Strait of Hormuz. This increase, though below previous peaks during the conflict, is significant as oil prices had recently stabilized.
The fear of prolonged conflict impacting global oil supply and inflation led to concerns about central banks raising interest rates. Higher rates can curb inflation but may also slow economic growth and affect various investments negatively.
On Wall Street, companies heavily reliant on fuel saw sharp declines. American Airlines and Carnival Corporation both experienced significant drops. Housing industry stocks were also affected by worries of rising Treasury yields affecting mortgage rates.
Conversely, some influential artificial intelligence stocks, which had been under pressure, stabilized. Nvidia notably rose 3.7%, exerting a significant positive impact on the S&P 500 due to its prominent position in the market.
In the bond market, Treasury yields increased alongside oil prices. European and Asian markets experienced losses, with Germany’s DAX and France’s CAC 40 both falling by 2.2%. South Korea’s Kospi plunged by 5.3%, while Hong Kong’s Hang Seng index defied the trend by rising 3%.
Chinese AI startup Zhipu, traded as Knowledge Atlas Technology, saw a notable 13.4% surge in its Hong Kong shares. The company’s stock price has skyrocketed over 1,300% since its debut earlier in the year.
