Quick ceasefire hopes dashed? Trump's speech shocks the market: crude oil and the dollar rise together, Asia-Pacific stocks turn lower

How does AI · Trump’s speech reverse market optimism?

Cailian Press, April 2 (Editor: Bian Chun) Early Thursday morning Beijing time, as U.S. President Trump delivered a nationwide address, global financial markets were thrown into turmoil: Asia-Pacific stocks fell, the U.S. dollar strengthened, and oil prices rose. Trump’s remarks shattered investors’ hopes for a rapid ceasefire between the U.S. and Iran.

According to media reports including CCTV News, on the evening of April 1 local time, Trump delivered a speech in which he claimed that the Iran conflict had achieved a “quick, decisive, overwhelming victory.” The U.S. core strategic objective in the Iran conflict is “close to completion.”

Trump also said that in the coming weeks, the U.S. will carry out stronger firepower strikes against Iran. He also threatened that if an agreement cannot be reached, the U.S. would launch fierce attacks on all of Iran’s power plants.

Trump’s speech rattles the market

Trump’s comments hit investors’ optimism that the war would end quickly. Just the day before (the 31st), Trump was at the White House saying that the U.S. would end its conflict with Iran in “two to three weeks,” and that an agreement with Iran might be reached before then.

In the past few days, the outlook that the Iran war could end boosted global stock markets and pushed the dollar back down from its highs. Before that, soaring oil prices had caused risk assets to plunge.

Trump’s latest speech reversed the direction of financial markets.

Asia-Pacific stocks turn from gains to losses, with Japan and South Korea leading the decline. The Nikkei 225 opened up 0.61%, but as of the time of writing, it was down 1.77%, at 52,786.23 points. South Korea’s KOSPI opened up 1.3%, but as of the time of writing, it fell 3.62%, to 5,280.39 points.

Meanwhile, U.S. stock index futures for all three major indices also fell sharply. As of the time of writing, Dow Jones Industrial Average futures were down 0.97%; S&P 500 index futures were down 1.12%; and Nasdaq 100 index futures were down 1.35%.

During turbulent times, the U.S. dollar has long been investors’ preferred safe-haven currency. After Trump delivered his speech, the U.S. dollar rose against most currencies. As of now, the U.S. dollar index is up 0.39%.

Oil prices surged sharply. As of now, the price of U.S. West Texas Intermediate (WTI) crude oil futures is up 3.82%, to $103.94 per barrel. The international benchmark Brent crude oil price is up 4.61%, to $105.82 per barrel.

Analysts and investors are closely watching when and how the Strait of Hormuz—the throat of energy transportation—will reopen, in order to ease the severe supply shocks faced by Asian economies.

Regarding the Strait of Hormuz, in his April 1 speech, Trump said the U.S. hardly needs to import oil through the Strait, and that countries that need to obtain oil via the Strait must “take care of maintaining this passage themselves.” Trump urged those countries to either “buy oil from the U.S.” or find the courage to go straight to the Strait of Hormuz “and seize oil.” He said that when the Iran conflict ends, the strait “will naturally reopen.”

Quick takes from international institutions

Some international institutions quickly weighed in on Trump’s speech. Nomura Securities commented that Trump’s remarks did not send a clear de-escalation signal in the way the market had hoped.

Robert Subbaraman, head of global market research at the firm, said that in the foreign exchange market, we may see Asian currencies weaken versus the dollar, and if volatility becomes too rapid, central banks in various countries may increase intervention. He added that this could provide upward momentum for government bond yields.

OCBC Bank in Singapore also expressed a similar view, saying that Trump’s speech reduced hopes for a quick end to the war, prompting the market to prepare for further escalation in the short term—higher oil prices and a stronger dollar.

Nick Twidale, Chief Market Analyst at AT Global Markets, said, “Investors are clearly not buying it. Global markets could have more downside today. Even though he says the war is about to end, the key message—that strikes on Iran will continue in the coming weeks—is extremely negative for the market.”

Pepperstone Group research strategist Dilin Wu said bluntly that Trump’s speech is indeed ‘disappointing.’ She noted that Trump’s earlier statements about pulling back from the Middle East now appear more like an attempt to “soothe the market while keeping pressure options open.” “He clearly still favors a strategy of applying pressure first, then easing, rather than a simple and straightforward de-escalation.”

(Cailian Press, Bian Chun)