US stocks slide on US-Iran jitters as brent tops $80

Reports coming in for today mention that A flare-up in geopolitical risks drove stocks and bonds softer as oil jumped after President Donald Trump stated a ceasefire with Iran may be over, noting the US would probably launch further strikes.

From New York to London and Tokyo, equities retreated. Almost 400 shares in the S&P 500 declined, though chipmakers stabilized after a selloff. The renewed hostilities in the Persian Gulf threatened a fresh wave of disruption for global energy trading, with Brent crude topping $80. That has reignited inflation worries, with money markets increasing their bets the The US central bank will lift interest rates by October. Bitcoin sank.

“We hit them very hard last night,” Trump stated Wednesday on the sidelines of the NATO summit in Ankara, Turkey. “Probably hit them hard again tonight.”

Trump spoke hours after the US rolled out strikes on Iran and revoked a waiver that allowed Tehran to sell its oil globally, measures that came in response to attacks on ships in the Strait of Hormuz. The president additionally noted that a blockade on Iranian ports could resume, raising concerns around a return to all-out war.

“Markets weren’t initially taking the re-escalation in US-Iran tensions too seriously earlier the current week,” stated Fawad Razaqzada at Forex.com. “But today, that seems to have changed.”

“The latest exchange of military strikes in the Middle East supports our view that crude prices will be volatile over the coming months, and will face bouts of upward pressure,” stated Hamad Hussain at Capital Economics. “That stated, under the assumption that some form of a ceasefire ends up holding and oil flows keep recover, we think Brent crude prices will settle close to current marks at the end of this year.”

Veteran strategist Ed Yardeni stated the rupture in the ceasefire between the US and Iran risks sparking a fresh acceleration in price expansion, which in turn could compel the Fed to mobilize interest rates.

“Inflation concerns are back in play and as a result of that, the Fed is back in play,” Yardeni stated Wednesday on Bloomberg Television’s Surveillance. “Not only has the Fed pivoted to tightening, but they may actually have to tighten.”

The spike in crude prices and elevated bond yields helped drive a near 10% equity correction in the first half of the year, but they additionally underscored the economy’s resilience to these shocks, according to Angelo Kourkafas at Edward Jones.

“Renewed geopolitical risks may fuel some near-term risk-off sentiment, but we do not expect market participants to react to this round of uncertainty in the same way,” he stated. “Neither the US nor Iran appears inclined toward a prolonged conflict. It would likely take a much larger and sustained climb in crude prices to materially alter the outlook for the economy and corporate earnings.