Negative Reaction To Trump’s Speech May Lead To Sharp Pullback On Wall Street

The major U.S. index futures are currently pointing to a sharply lower open on Thursday, with stocks likely to give back ground after moving substantially higher over the two previous sessions.

Renewed concerns about an escalation of the conflict in the Middle East are likely to weigh on Wall Street following President Donald Trump’s primetime address Wednesday night.

Trump’s speech largely echoed his recent comments and Truth Social posts, but traders seem to be responding negatively to the tone of his remarks.

The president reiterated his claim that the war will be over “very shortly” but also said the U.S. is going to hit Iran “extremely hard over the next two to three weeks,” bringing the country “back to the stone ages where they belong.”

Trump also once again called on other countries to “build up some delayed courage” and take control of the vital Strait of Hormuz, claiming, “The hard part is done.”

After moving sharply lower over the past two days amid optimism an end to the conflict, crude oil prices have skyrocketed in reaction to Trump’s speech, with U.S. crude oil futures spiking by more than 11 percent.

“Investors didn’t get what they wanted from President Trump’s address to the American people and have reacted accordingly,” said AJ Bell investment director Russ Mould.

He added, “Famously, uncertainty is kryptonite for the markets and between the contradictory messages from Trump, disputed claims on both sides, and the lack of clarity on a plan which can provide a resolution to the conflict they are getting a heavy dose of it right now.”

Stocks moved mostly higher during trading on Wednesday, adding to the substantial gains posted during Tuesday’s session. The major averages all moved to the upside, with the tech-heavy Nasdaq posting a standout gain.

The major averages gave back some ground in afternoon trading after a morning rally but remained firmly positive. The Nasdaq jumped 250.32 points or 1.2 percent to 21,840.95, the S&P 500 climbed 46.80 points or 0.7 percent to 6,575.32 and the Dow rose 224.23 points or 0.5 percent to 46,565.74.

The extended the rally on Wall Street came amid optimism about an end to the U.S. war with Iran following the latest comments by President Donald Trump.

Speaking to reporters at the White House on Tuesday, Trump said he expects U.S. military forces to leave Iran in “two or three weeks.”

The president argued that the U.S. does not have to reach a negotiated settlement to end the war with Iran, calling a deal “irrelevant” because “everything’s been bombed out.”

Trump later claimed in a Truth Social post this morning that Iran’s “new regime president” has asked for a ceasefire, which he said the U.S. would consider when the Strait of Hormuz is “open, free, and clear.”

However, in response to Trump’s post, a report from Al Jazeera said an Iranian official clearly denied that Tehran has requested a ceasefire.

Gold stocks extended Tuesday’s rally as the price of the precious metal continued to surge, driving the NYSE Arca Gold Bugs Index up by 4.3 percent.

Substantial strength was also visible among airline stocks, with the NYSE Arca Airline Index soaring by 2.8 percent.

Semiconductor, networking and computer hardware also saw significant strength, contributing to the jump by the tech-heavy Nasdaq.

Steel, financial and pharmaceutical stocks also showed strong moves to the upside, while energy stocks came under pressure amid the steep drop by the price of crude oil.

Commodity, Currency Markets

Crude oil futures are soaring $11.11 to $111.23 a barrel after slumping $1.26 to $100.12 barrel on Wednesday. Meanwhile, after jumping $133.40 to $4,796.10 an ounce in the previous session, gold futures are plunging $161.60 to $4,634.50 an ounce.

On the currency front, the U.S. dollar is trading at 159.58 yen versus the 158.78 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1527 compared to yesterday’s $1.1588.

Asia

Asian stocks tumbled on Thursday as hopes for a potential end to the Middle East conflict faded.

The dollar and bond yields jumped, crude oil prices surged more than 6 percent and gold plunged nearly 3 percent toward $4,600 an ounce after U.S. President Donald Trump spoke about the attacks in a televised address to the nation.

In his rare primetime speech, Trump said Washington is “getting very close” to achieving its goals and the U.S. will bring Iran “back to the Stone Ages where they belong” by striking hard in the next two to three weeks.

He gave no clear end date for the Middle East conflict, raising the risk of more extensive damage to energy infrastructure throughout the Gulf.

China’s Shanghai Composite Index dropped 0.7 percent to 3,919.29 even as pork stocks rose after authorities announced they will soon launch the second batch of central frozen pork reserve purchases.

Hong Kong’s Hang Seng Index fell 0.7 percent to 25,116.53, extending losses for a second straight session as hopes for an imminent resolution to the Iran conflict dimmed.

Japanese markets tumbled as U.S. President Trump’s comments revived inflation concerns and sparked a broad risk-off in the region.

The Nikkei 225 Index slumped 2.4 percent to 52,463.27, while the broader Topix Index settled 1.6 percent lower at 3,611.67.

Seoul stocks plummeted on concerns that the Iran war would drag on. The Kospi plunged 4.5 percent to 5,234.05, with market bellwethers Samsung Electronics and SK Hynix falling 6-7 percent.

Program selling was halted temporarily earlier in the day after KOSPI 200 futures fell more than 5 percent.

Australian markets ended lower after Trump vowed more aggressive strikes on Iran. The benchmark S&P/ASX 200 Index ended down 1.1 percent at 8,579.50, marking its biggest single-day loss since March 19. The broader All Ordinaries Index fell 1.3 percent to 8,774.90.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index rose 0.6 percent to 12,902.15 after suffering losses in the previous session.

Europe

European stocks have fallen on Thursday after U.S. President Donald Trump gave no clear end date for the Middle East conflict in his rare primetime speech and vowed more strikes on Iran, raising the risk of more extensive damage to energy infrastructure throughout the Gulf.

Inflation and growth fears returned to the fore as oil prices jumped more than 7 percent on supply disruption fears.

Iran rejected Trump’s claim that it had sought a ceasefire, asserting that the Strait of Hormuz would remain closed and that the vital transit route is firmly under IRGC Navy control.

The Financial Times reported that an international conference of 35 countries led by the U.K. will meet today in an effort to exert political and diplomatic pressure to reopen the strait.

While the German DAX Index is down by 2.4 percent, the French CAC 40 Index is down by 1.4 percent and the U.K.’s FTSE 100 Index is down by 0.6 percent.

Banks traded sharply lower, with Commerzbank, Deutsche Bank and BNP Paribas showing significant moves to the upside.

Skanska has also moved sharply lower. The Swedish construction giant has agreed to sell its entire 50 percent stake in its I-4 Mobility Partners HoldCo joint venture to its partner, John Laing I-4 Holdco.

Meanwhile, AstraZeneca has edged up slightly after announcing that its liver cancer treatment showed promise in a phase III trial.

U.S. Economic News

First time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended March 28th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims dipped to 202,000, a decrease of 9,000 from the previous week’s revised level of 211,000.

Economists had expected jobless claims to inch up to 212,000 from the 210,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also edged down to 207,750, a decrease of 3,000 from the previous week’s revised average of 210,750.

A separate report released by the Commerce Department on Thursday showed the U.S. trade deficit increased by less than expected in the month of February.

The Commerce Department said the trade deficit widened to $57.3 billion in February from a revised $54.7 billion in January.

Economists had expected the trade deficit to jump to $60.1 billion from the $54.5 billion originally reported for the previous month.

The wider trade deficit came as the value of imports surged by 4.3 percent to $372.1 billion, while the value of exports shot up by 4.2 percent to $314.8 billion.

At 10:15 am ET, Dallas Federal Reserve President Lorie Logan is due to participate in a fireside chat before the Eleventh District Banking Conference.

The Treasury Department is scheduled to announce the details of this month’s auctions of three-year and ten-year notes and thirty-year bonds at 11 am ET.