Oil prices increased while stock markets declined globally on Wednesday following U.S. President Donald Trump’s skepticism regarding the temporary truce with Iran. The S&P 500 dropped by 0.3% after an initial decline of 1.1% earlier in the day. The Dow Jones Industrial Average fell by 1.1% when Trump announced the end of the ceasefire. However, the Nasdaq composite recovered from an early decline and rose by 0.2% after Trump clarified that recent hostilities did not signal a return to full-scale conflict.
Canada’s primary index, the S&P/TSX, closed the day down by around 1%. In the oil market, the price of Brent crude per barrel surged by 5.2% to $78.02 US, briefly surpassing $80 US. This increase, although below previous highs during the conflict, raised concerns as oil prices had recently returned to pre-war levels. The fear stems from the potential blockade of the Strait of Hormuz, hindering oil tanker movements and impacting global crude deliveries, which could exacerbate inflation. This scenario might prompt central banks to raise interest rates, impacting economic growth and investment prices.
On Wall Street, companies heavily reliant on fuel experienced significant declines. American Airlines saw a 4% drop, while cruise operator Carnival’s shares fell by 3.9%. Housing industry stocks were also affected, with concerns arising from rising Treasury yields leading to higher mortgage rates and dampening the sector.
Amidst these losses, some influential artificial intelligence companies stabilized, alleviating market concerns about overvaluation and productivity. Notably, Nvidia’s 3.7% rise positively impacted the S&P 500 due to its prominent position in the market.
In the bond market, Treasury yields increased alongside oil prices, with the 10-year Treasury yield briefly nearing 4.60% before settling at 4.57%. International markets mirrored the negative trend, with European and Asian markets experiencing declines, except for Hong Kong’s Hang Seng index, which rose by 3%.
The Chinese AI startup Zhipu, also known as Z.ai, witnessed a significant 13.4% surge in its Hong Kong-traded shares. This increase followed the expiration of a six-month lockup period for key investors post its January debut, showcasing a remarkable rise of over 1,300% in its share price since inception.
