Sharp increases in Europe and Asia, after Trump calmed the markets

14:55

The increases in Europe moderate slightly. The DAX index is now up by about 2.2%, while the Putsy and KAC are both up by about 1.5%. Wall Street futures also went down by up to 0.2%.

In the background, the American Secretary of War, Pete Hegseth, said at a press conference in the Pentagon that “today (Tuesday) will be the most intense day of our strikes in Iran.” Hesseth added that “Iran stands alone and is losing severely.”

13:05

The sharp increases in Europe continue. The DAX index jumps by about 2.7%, the FTSE advances by about 1.8% and the KAC jumps by about 2.2%.

It is reported in the financial media abroad that the Jewish-American investor and billionaire, Bill Ackman, is about to list his hedge fund, Pershing Square, on the New York Stock Exchange. Following the report, Pershing Square which is currently traded on the London Stock Exchange, jumps by about 7%.

11:40

Trade in Europe continues to be conducted with sharp increases. The Dax index jumps by about 2.7%, the FTSE jumps by about 1.8% and the KAC adds to its value by about 2.2%. The increases are horizontal and most sectors in Europe are trading in positive territory, with the exception of energy stocks, which are weakening against the background of the decline in global oil prices.

Wall Street futures continue to fall short with gains of up to 0.5%.

In the crypto market, Bitcoin is recovering and rising by about 4% to a price of about $71,000 per coin.

In the US debt market, government bond yields continue to fall, which reflects a decrease in the level of risk and fears of an inflationary outbreak. The ten-year yield falls by over 3 basis points to 4.1%, while the two-year yield falls by over 4 basis points to 3.54%.

10:30

European stock markets opened the day with sharp price increases. The DAX index jumps by about 2.3%, the FTSE climbs by about 1.5% and the KAC adds to its value by about 1.8%. Wall Street futures are now up as much as 0.5%.

Oil is currently trading in declines. The price of a barrel of American oil is about 87 dollars, while the price of a barrel of Brent oil is about 91 dollars.

9:35

Asia

In Asia, where the markets are very dependent on the supply of oil from the Middle East, sharp increases are recorded this morning, following the recovery recorded on Wall Street last night. The Tokyo Stock Exchange jumped by about 3%, the Hong Kong Stock Exchange jumped by about 2%, the Shanghai Stock Exchange advanced by about 0.7% and the South Korean stock market jumped by about 5.3%.

Wall Street

On Wall Street, the leading indexes recovered from drops of over 1% at the beginning of the trading day and ended the day with decent price increases, following Trump’s words regarding the imminent end of the war against Iran. The indexes made an impressive comeback during the last trading hour, and finally the Nasdaq closed up 1.4%, the S&P 500 climbed about 0.8% and the Dow Jones added about 0.5% to its value. This morning, the futures register slight gains of up to 0.2%.

Trump told CBS that the war against Iran may end soon. Trump said that the war is “pretty much over”, noted that “Iran has no navy, no communications, no air force”, and said that the US was far ahead of the 4-5 week schedule it set as a starting point. In addition, he noted that American ships are crossing the Straits of Hormuz and that he is “considering taking them over”.

As mentioned, Trump’s words led to an upheaval on Wall Street, which ended the day in the green, even though it started the day down more than 1%. At the same time, oil prices, which on the night between Sunday and Monday recorded their biggest daily jump in several decades and stood for a while at the level of 115 dollars per barrel, went down. Brent oil fell below the level of $90 per barrel, while American oil fell to the level of $85 per barrel (see expansion below).

After the closing of trading on Wall Street, additional words of Trump were published from a press conference he held, during which he stated that the war will not end this week, but will end “very soon”. “The United States will not rest until the enemy is completely defeated,” he said. Trump threatened that if Iran tries to block the Straits of Hormuz, the United States will attack it with 20 times greater force than has been seen so far, noting again that in the long term oil prices will fall.

Oil prices, which, as mentioned, ended the day in decline, after reaching their highest level in about four years, moderated significantly already during the trading day; This, after it was reported in the Financial Times that the finance ministers of the G7 countries are discussing the possibility of a joint flow of oil from the strategic reservoirs, in coordination with the International Energy Agency. A few hours after the report, CNBC announced that the energy ministers of the G7 countries will hold an online meeting this morning (Tuesday) to discuss the release of oil from their strategic reservoirs, in order to deal with the disruption in oil supply caused by the war against Iran.

Matt Stuckey, chief investment officer at Northwestern Mutual, commented on the turnaround and told CNBC that “this is simply a very clear indication that oil is in the driver’s seat in the near term. From peak to trough, in one day, we saw oil prices correct downward by 30%, while risk assets, and in particular the stock market, responded with a rally to the news.”

Technology stocks led yesterday’s recovery on Wall Street, with chip stocks among them Broadcom , Micron , AMD andNvidia stood out especially positively. Overall, the IT sector, which includes technology stocks, led among the S&P 500 sectors, with an increase of 1.8%, while the two weakest sectors were energy and financials, with decreases of about 0.5%.

Ronen Menachem, the chief economist of Mizrahi Tefahot, wrote this morning that “the sharp and rapid increases towards the end of trading on Wall Street, along with the collapse of crude oil prices, testified to the enormous importance and strong desire of investors that the campaign in Iran end as quickly as possible – regardless of its results – at least not in the short term. This desire will be evidenced by the sharp drop in the fear index, with Trump’s signaling that the war It is nearing its end and that most of its goals have actually been completed.”

Menachem added: “Nevertheless, one should not necessarily conclude from this regarding the continuation, and in my estimation the more likely scenario is that the high volatility will continue. This is because the war is still ongoing, official Iran continues to show determination and the president himself has set different deadlines for the end of the war since it began and even before that, when it was on the agenda. Therefore, the level of risk that investors attributed to the stock markets around the world will not soon return to the levels that preceded the start of the campaign or even to the levels that prevailed during the waiting period the tense one”.

Even before the recovery of the stock market, a number of analysts published rather pessimistic comments about the state of the markets, while fears of stagflation – a combination of economic slowdown alongside inflationary warming – spread on Wall Street.

Senior market strategist, Ed Jordani, said that “We cannot rule out a bear market if investors begin to expect a ‘replay’ scenario of the stagflationary 1970s. If the oil shock continues, the Federal Reserve’s dual mandate will be stuck between the growing risk of higher inflation and rising unemployment.”

At the investment bank J. times. Morgan warned that investors in the US are not properly prepared for a downward correction in the S&P 500 index by at least 10% – so reports Bloomberg. According to the report, the correction means a decrease of about 7% in the American flagship index, compared to the price at which it closed last Friday (a decrease to a level of about 6,270 points).

Andrew Tyler, head of the global markets intelligence department at JPMorgan, shifted his position in relation to the American stock market to a “bearish tactical position”, against the background of the war against Iran, the end of which is not yet in sight. Tyler said he believes investors are not prepared for declines and noted that “there has been a lack of extreme de-risking (ie, sales of risk assets).”

On the other hand, the investment bank Morgan Stanley said that they expect the American stock market to remain stable for at least another year, despite the rising geopolitical tensions. According to analysts, the American market has already shown several signs of exiting a correction that lasted for months, including consolidation in stock performance (price movement in a limited range, preceding a breakout in some direction) and market positioning in the more crowded areas of the market. “We believe we are closer to the end of this rolling correction than the beginning, and remain positive about the next 6-12 months,” the analysts wrote.

US debt market

In the American debt market, government bond yields, which climbed throughout last week, amid fears that the spike in oil prices would lead to an inflationary outbreak, recorded declines yesterday. The ten-year yield fell by about 2 basis points to a level of 4.11%, while the two-year yield fell by about 3 basis points to a level of 3.56%.

The commodity and currency markets

At the same time as the recovery recorded on Wall Street, the shekel strengthened yesterday by about 0.9% against the dollar and the dollar-shekel exchange rate stood at NIS 3.08. This morning, the dollar strengthened against the shekel by about 0.5% and the exchange rate stands at 3.09 shekels. The dollar index (DXY), which strengthened globally in recent days while investors flocked to “safe haven” assets, is down about 0.3% this morning.

As mentioned, oil prices jumped yesterday morning by about 25% to around $120 per barrel, the sharpest daily increase since the end of 1988 and the highest level since 2022. This, after major oil producers in the Middle East – including Kuwait, Iran and the United Arab Emirates – cut their output following the closure of the Straits of Hormuz, which also leads to fears of a disruption in the supply of black gold. But Trump’s statements regarding the imminent end of the war, and in particular regarding the possibility that he will take over the Straits of Hormuz militarily, led to the cancellation of the spike in oil prices and even to declines. This morning, Brent crude was trading at around $92, while US crude was trading at around $88.

Bob McNally, president of Rapidan Energy, told CNBC yesterday that “I think there’s a lot of optimism in the market. We saw that with the collapse in oil prices, after what we usually call the president’s ‘verbal intervention.’

McNally said the market was still struggling to digest the scale of the disruption, noting that for decades, traders assumed that no country would be allowed to close the Strait of Hormuz – the world’s most critical oil bottleneck. He added that the fact that it happened at all was “absolutely catastrophic and unexpected,” pointing out that even during the tensions of the 1980s, the waterway was never completely closed.

For now, markets appear to be betting that the situation cannot last long and that shipping in the Strait of Hormuz will eventually resume, McNally said. “We will have to wait and see how Iran reacts to the president’s words and whether it will attack oil infrastructures in the coming hours.”

In the commodities market, gold, which has come under pressure in recent days, among other things, against the background of the strengthening of the dollar in the world, rises this morning by about 0.8% and trades around a price of $5,180 per ounce. Bitcoin also recovers and rises by about 3% to a price of about $70,000 per coin.

Macro

In the reference published this morning by Ronen Menachem, Mizrahi Tefahot’s chief economist, to the latest security developments, he noted that “from an economic point of view, a faster-than-expected end of the estimate will keep the stagflation scenario at bay. The chance that interest rates in the US will drop again before the middle of the year will rise again significantly.”

In the US macro sector, the consumer price index for February is expected to be published tomorrow. Analysts estimate that it will show a monthly increase of 0.3%, which will keep the annual inflation rate stable at 2.4%. Michael Aron, chief investment strategist at State Street Investment Management, told Reuters last week that “if the inflation figures surprise upwards, it could add fuel to the fire and exacerbate concerns about to inflation expectations, and that will be bad for the markets.”