Trump declares Iran peace deal dead at NATO summit, oil surges 5% and Wall Street falls
US President Donald Trump said the preliminary peace agreement with Iran is over, triggering new US strikes and a sharp rise in oil prices. Wall Street ended mostly lower as geopolitical risk returned.
Trump declares Iran peace deal dead
At the NATO summit in Ankara, US President Donald Trump said he believes the preliminary peace agreement with Iran has ceased to be in effect. He added he wants nothing to do with Iranians, calling them "sick people." The statement came shortly after the US launched new attacks on Iran and revoked permission for Iranian oil sales.
I think the preliminary peace agreement with Iran has ceased to be in effect. I want nothing to do with Iranians, because they are sick people.
Renewed strikes on both sides
The diplomatic breakdown follows a night of renewed hostilities. Iranian military fired at least two rockets, hitting and damaging two ships transiting the Strait of Hormuz on Monday, according to Axios. In response, US forces conducted a new round of strikes on Iran overnight Tuesday to Wednesday. The exchange marked the first such attacks in nearly two weeks, shattering a fragile ceasefire.
- Iranian rockets hit two ships in Strait of Hormuz, first such attack in nearly two weeks.
- US forces conduct new round of strikes on Iran.
- Trump declares peace deal dead at NATO summit; markets fall, oil surges.
Markets fall, oil surges
Wall Street ended mostly lower on Wednesday. The Dow Jones Industrial Average fell 1.09% to 52,348.39, the S&P 500 lost 0.28% to 7,482.71, while the Nasdaq Composite edged up 0.20% to 25,870.65. The Russell 2000 dropped 0.88%, and the VIX volatility index rose 4.77% to 16.90. Oil prices jumped sharply: WTI crude for August delivery surged 5.55% to $74.39 a barrel, and Brent crude for September rose 5.8% to $78.43.
- Dow Jones
- -1.09 %
- S&P 500
- -0.28 %
- Nasdaq
- 0.2 %
- Russell 2000
- -0.88 %
- VIX
- 4.77 %
Analysts weigh limited equity impact
Market strategists cautioned that while geopolitical risk has returned, the direct impact on equities may be contained unless oil prices spike further.
The incoming negative news is pushing markets down, and with no significant earnings results in the next few days to reverse the trend, it seems markets will have no respite.
The renewal of tensions in the Middle East has interrupted an increasingly calm market narrative, prompting investors to reprice geopolitical risk after several weeks of pricing a smooth de-escalation path.
Much larger oil price swings are needed to dominate other factors affecting equity markets. The escalation of US-Iran tensions poses a downside risk, but without a significantly larger increase in commodity prices, it is unlikely to have a material impact on equity markets.
Polish market reacts
In Warsaw, the WIG20 index fell 0.39% to 3,660.06, with copper miner KGHM down about 5% after a Morgan Stanley downgrade. Oil refiner Orlen gained 1.8%, benefiting from higher crude prices. Konrad Ryczko, an analyst at DM BOŚ, noted that markets were surprised by the geopolitical turn, having assumed the US-Iran agreement was durable.
It doesn't seem the market is pricing a return to full-scale conflict; rather it's an escalation episode, but with a perspective that in the broader context it's heading toward de-escalation and agreements.
