Wall Street's stock market reportedly plunged on Wednesday with the Dow Jones index plunging 488 points or 0.9%. This large-scale fall was directly triggered by US President Donald Trump's official declaration in Turkey that the ceasefire agreement between Washington and Iran is now "completely over".
Investors' panicked sentiment worsened after Trump issued a new military warning that the US military is likely to launch a series of follow-up air strikes on Iranian territory. This aggressive geopolitical move was taken as a concrete response to punish Tehran after it was accused of violating the peace memorandum through missile attacks on three commercial ships in the Strait of Hormuz.
NATO Secretary General Mark Rutte officially defended Washington's crackdown by labeling a series of Centcom strikes on more than 80 strategic Iranian targets as a "very necessary" measure to protect international maritime trade corridors. The confirmation of the transatlantic bloc's support erased expectations of an interim global peace, widening risk premiums on commodity exchanges.
As a result, the energy futures market skyrocketed drastically, with benchmark Brent crude oil jumping 5.2% to $78.01 per barrel, while US WTI jumped 5% to $73.96 per barrel. This surge fueled gains in energy giants such as ConocoPhillips and Exxon Mobil, but also hurt consumer goods stocks such as Home Depot and McDonald's, which were hit by the risk of rising operating costs.
Amidst the volatility in the equity market, institutional investors' attention is now shifting to the publication of the June FOMC meeting minutes issued by the Federal Reserve (Fed). This document is considered very critical because it is the first policy minutes under the leadership of the latest Fed Chairman, Kevin Warsh, to examine the extent to which committee members are inclined to reactivate interest rate hikes if inflation data accelerates again due to an energy shock.
