US stocks rebound late as Trump signals Iran war may end soon

Yesterday 11:50

By: Dakir Madiha

US stocks rebound late as Trump signals Iran war may end soon

U.S. stock markets recovered sharply late in the trading session after President Donald Trump suggested the war involving the United States and Israel against Iran could soon come to an end, easing some of the pressure from an energy shock that had shaken global markets earlier in the day.

Oil prices had surged above $100 per barrel for the first time since Russia’s invasion of Ukraine in 2022 as the conflict entered its tenth day. The effective closure of the Strait of Hormuz has cut off roughly one fifth of global oil supply, sending Brent crude briefly toward $120 per barrel before retreating.

The energy surge triggered turbulence across financial markets from Asia to Europe and the United States. Investors grew increasingly concerned about the risk of stagflation, a combination of high inflation and slowing economic growth, as energy prices jumped while the U.S. labor market weakened.

According to the U.S. Bureau of Labor Statistics, the American economy lost 92,000 jobs in February, significantly worse than economists’ expectations for a gain of about 50,000 positions. The unemployment rate rose to 4.4 percent, marking the third monthly decline in payrolls over the past five months.

Asian markets experienced the sharpest losses earlier in the trading cycle. Japan’s Nikkei 225 dropped more than 5 percent, while South Korea’s Kospi fell over 6 percent, triggering trading curbs and pushing the index close to bear market territory.

Hong Kong’s Hang Seng declined 4 percent, Australia’s ASX 200 fell about 3 percent and China’s Shanghai Composite dropped 2.5 percent. European markets also opened more than 2 percent lower.

In the United States, futures tied to the Dow Jones Industrial Average plunged by more than 1,000 points overnight. During the session, the index dropped nearly 900 points before reversing course.

The Dow ultimately closed up 239 points after Trump told CBS he believed the conflict was “very finished, pretty much,” according to reporting by The Wall Street Journal. The Nasdaq Composite gained 1.4 percent and the S&P 500 also ended the day in positive territory.

The energy shock is closely linked to the disruption in the Strait of Hormuz, a narrow maritime passage at the southern edge of Iran that normally handles about 20 million barrels per day of crude oil and liquefied natural gas shipments.

Iran’s Revolutionary Guards claimed control of the strait on March 4, and at least eight vessels have reportedly been damaged since the conflict began on February 28.

The disruption has forced several Gulf producers to reduce output. According to CNBC, countries including the United Arab Emirates have curtailed production as storage facilities fill with crude that cannot be exported. Saudi Arabia has also joined the production cuts, Bloomberg reported.

The impact is already being felt by consumers in the United States. Gasoline prices have risen by about 47 cents in a single week, pushing the national average for regular gasoline to $3.48 per gallon, according to the Washington Post. Analysts warn that $4 gasoline could soon become widespread.

Energy ministers from the Group of Seven countries are discussing a coordinated release of strategic petroleum reserves to stabilize global supply.

Economists warn that the oil shock is hitting an already fragile economy. Erik Norland, chief economist at CME Group, told CNBC that the risk of stagflation has been growing due to persistent inflation, large government deficits and rising energy costs.

Financial markets are also adjusting expectations for monetary policy. Reuters reported that investors no longer expect the U.S. Federal Reserve to cut interest rates in June, pushing the anticipated first reduction to September and eliminating expectations for a second cut in 2026.

Analysts say the economic outlook now depends largely on the duration of the conflict. If the war ends within weeks, as Trump suggested, the economic shock could prove temporary. However, prolonged disruption in oil markets could deepen inflationary pressures and slow global growth.