The U.S. President Trump said on Monday (March 9) that the conflict between the United States and Iran is expected to be resolved “very soon.” This optimistic signal immediately triggered a dramatic reaction in the global financial markets. Crude oil prices plummeted from a high of nearly $120 per barrel, and the stock markets in the Asia-Pacific region and the United States rebounded after experiencing a sharp decline.
At a press conference in Florida, Trump stated that the current military operations are ahead of schedule. The United States has struck 5,000 targets inside Iran and has reduced its missile capability by 10%.
Although he admitted that the conflict will not end completely this week, he said in a phone interview with CBS News, “We think the war is fought very thoroughly, it’s almost over.”
In order to calm the soaring energy prices, Trump revealed that various economic and military measures are being considered, including temporarily exempting some oil-related sanctions and having the U.S. Navy escort oil tankers through the Strait of Hormuz.
Trump also told CBS that the traffic of ships in the Strait of Hormuz is increasing, and he is “considering taking over it.” It is currently unclear what specific actions the U.S. will take.
The Strait of Hormuz is the most important energy transport route in the world, accounting for about 20% of global maritime oil and natural gas trade, including OPEC member countries such as Saudi Arabia, Iran, the United Arab Emirates, Kuwait, and Iraq, with most of their oil exports relying on this waterway.
In early March, in response to the “Operation Epic Fury” launched by the United States and Israel, Iran announced the closure of the Strait of Hormuz.
However, Trump emphasized that although the interruption of oil transportation in that passage caused a temporary spike in market oil prices, in the long run, this war will eliminate the threat Iran poses to global shipping and oil supply, ultimately leading to a drop in oil prices.
“The Strait of Hormuz will remain secure,” he said. “We will completely end all these threats, and the result will be a fall in oil prices, and the prices of oil and gas for American households will also drop.”
Encouraged by this news, oil prices, which had skyrocketed due to war fears, experienced a sharp fall. West Texas Intermediate (WTI) crude oil futures plummeted by about 10%, finally falling below $90 per barrel.
At the same time, the finance ministers of the Group of Seven (G7) issued a joint statement, emphasizing their readiness to release strategic oil reserves when necessary to stabilize global energy supplies.
Boosted by the positive news, financial markets immediately began a “relief rally.”
On Monday, the three major U.S. stock indices experienced a dramatic rebound. Although the Dow Jones Industrial Average tumbled nearly 900 points at one point during the day, the S&P 500 and the Nasdaq indices both initially dropped by up to 1.5%, but ultimately closed higher. The S&P 500 index rose by 0.83% to 6,795.99 points, the Dow index increased by 0.5% to 47,740.80 points, and the Nasdaq Composite index jumped significantly by 1.38% to 22,695.95 points.
In line with the stock market rebound, the yield on 10-year U.S. treasuries also halted its five-day continuous rise.
On Tuesday, the South Korean KOSPI index led gains in Asia after the opening, surging by up to 5.5%, with semiconductor leaders Samsung Electronics and SK Hynix both rising by more than 8%.
The Nikkei index in Japan also surged by about 3%, recovering some lost ground.
The Taiwan stock market opened with a more than 3% increase, with the semiconductor sector showing strength across the board. Taiwan Semiconductor Manufacturing Co. surged by 70 NT dollars, reigniting market confidence.
Analysts pointed out that the market’s sensitive response to Trump’s signal of ending the war, but also warned that oil prices are still high, and market sentiment remains cautious.
In terms of gold prices, they tend to stabilize, currently fluctuating around $5,135 per ounce. Silver rose by 0.1% to $86.99, while platinum saw a slight decline, and palladium rose.
Mojtaba Khamenei, the son of the late Supreme Leader of Iran, has been elected to succeed as the Supreme Leader. Analysts believe that the new leader has a close relationship with the Islamic Revolutionary Guard Corps, and his appointment may mean Iran will maintain its existing hardline stance.
Despite the market sentiment turning optimistic, local security risks have not been completely eliminated. The United States has requested non-essential diplomats stationed in Saudi Arabia to evacuate on Monday, marking the first “departure order” issued since the start of the war.
With Trump suggesting that the war may end in the “near term,” investors are closely watching the subsequent passage solutions in the Strait of Hormuz and the specific policies Washington will take to stabilize oil prices.
Hideyuki Ishiguro, Chief Strategist at Nomura Asset Management, pointed out to Bloomberg that with the decline in oil prices and Trump’s remarks, market panic is diminishing. He observed that despite the market experiencing a major downturn, there is still a strong willingness to “buy on the dip.”
However, Ishiguro also warned that as oil prices remain above $80 and there is no clear resolution to the conflict, concerns about credit risk continue to weigh on financial stocks, so it is “too early to assert that the market has completely turned optimistic.”