TACO! Trump says "The war will end soon," U.S. stocks and bonds sharply rebound, and crude oil once plummeted 30% from the daily high

Due to concerns over a prolonged disruption of the global energy supply chain, crude oil prices surged at one point, triggering a sharp decline in global risk assets. However, as G7 finance ministers indicated possible measures to stabilize oil prices and Trump hinted that the war is “basically over” and ahead of schedule, market panic eased. Short covering and bargain hunting jointly drove risk assets to rally strongly in the late session, while crude oil prices fell significantly from the daily high.

On Monday, the three major US stock indexes all closed higher, with the S&P 500 turning positive after dropping 1.5% intraday—the first time since April last year—and ending up 0.8%. The small-cap Russell 2000 index briefly fell 2.4% intraday but recovered to close up 1.12%.

( US stock benchmark indices intraday movement)

Wall Street Journal reported that only one bulk carrier related to Iran left the Persian Gulf in the past 24 hours. With shipping through the Strait of Hormuz halted, WTI crude oil prices surged nearly 30%, approaching $120. Fears of runaway inflation and recession caused US stocks to open lower.

However, the selling wave reversed during the US midday session. After an emergency video conference, G7 issued a joint statement saying they are “ready at any time” to take necessary measures to support global energy supply and stabilize prices.

Subsequently, according to CCTV News, US President Trump said in a phone interview:

I think this war is basically over, almost done. They no longer have a navy, no communication systems, and no air force.

Trump also said that the progress is “much faster” than his initial estimate of 4 to 5 weeks. Oil prices then accelerated their decline, with US crude dropping over 31% from the daily high and down 7% from last Friday’s close, while Brent crude fell 4.67%.

( Oil prices plummet after G7 hints at strategic reserves release and Trump’s “war over” statement)

The retreat in oil prices immediately eased inflation fears weighing on risk assets. Major US stock indexes rallied strongly in the last hour, with the Nasdaq leading and essentially recovering all losses since the Iran conflict began.

( US stock benchmark indices since last Monday)

Interactive Brokers’ Steve Sosnick said:

We’re seeing the familiar pattern again. US stock index futures plunge sharply overnight; when domestic traders wake up rubbing their sleepy eyes and start pressing ‘buy’ on their screens, the indices rebound; after a brief period of nervousness at open, the ever-hopeful ‘buy-the-dip’ crowd enters the market to scoop up bargains.

Behind this extreme volatility is not only retail investors’ reliance on ‘buying the dip’ but also amplified by the structure of the options market.

Analysts believe that currently, US stocks are in a typical “negative gamma” state, where market makers are forced to sell during declines and quickly buy back to hedge during rebounds. This mechanical trading greatly magnifies intraday market swings.

Carol Schleif of BMO Private Wealth said:

As the conflict evolves this week, we expect markets to remain highly attentive to short-term developments, with increased volatility and news-driven moves.

JPMorgan’s Andrew Tyler noted that due to the war, the S&P 500 could fall as much as 10% from its peak, catching traders unprepared, and he has shifted to a “tactical bearish” stance.

Yardeni Research founder raised the probability of a stock market crash this year from 20% to 35%. He also significantly lowered the chance of a major rally from 20% to 5%. The so-called “surge” refers to a rally driven mainly by investor enthusiasm rather than fundamentals.

As fears of inflation subside, the 10-year US Treasury yield ended a five-day rising streak, falling 2.7 basis points intraday. The dollar index briefly surged nearly 0.8%, approaching last November 28 high, then retraced all gains, down 1% from the daily high.

( 10-year US Treasury yield vs crude oil price chart)

Spot gold also came under pressure during the early sell-off but rebounded as the dollar retreated from highs, ending the day down 0.7% from last Friday’s close. Spot silver reversed its intraday decline, rising over 3%. Among precious metals, spot palladium performed strongly, rising over 4% at one point.

( Gold price)

On Monday, all three major US stock indexes closed higher, with the S&P 500 up 0.8% and the Nasdaq up over 1.3%. Semiconductor ETFs gained over 3.6%, leading sector ETFs, while the S&P energy sector declined over 0.4%. Hims & Hers shares soared over 40%, and Novo Nordisk withdrew a patent infringement lawsuit previously filed against Hims & Hers.

US stock benchmark indices:

• S&P 500 up 55.97 points, +0.83%, at 6,795.99.

• Dow Jones Industrial up 239.25 points, +0.50%, at 47,740.80.

• Nasdaq up 308.27 points, +1.38%, at 22,695.95; Nasdaq 100 up 324.23 points, +1.32%, at 24,967.25.

• Russell 2000 up 1.12%, at 2,553.67.

• Volatility index VIX down 13.53%, at 25.50.

Sector ETFs:

• Semiconductor ETF +3.63%, biotech ETF +2.23%, global tech ETF +2.17%, tech sector and global airline ETFs at least +1.66%.

( Sector ETFs as of March 9)

The “Magnificent 7” tech giants rose 1.34%, reaching 194.97 points, mostly declining during the day and surging after Trump’s speech at 03:19 Beijing time.

• Nvidia gained 2.72%, Google A 2.70%, Apple, Tesla, Meta, Microsoft at least +0.11%.

Chip stocks:

• Philadelphia Semiconductor Index up 3.93%, at 7,810.40.

• AMD up 5.33%, TSMC up 2.89%.

Chinese concept stocks:

• Nasdaq Golden Dragon China Index up 1.76%, at 7,083.84.

• Popular Chinese stocks: Xpeng up 6.4%, BYD up 6%, Meituan up 5.7%, Li Auto and NIO up over 3.8%, Baidu up 2.9%, Tencent up 2.4%, Alibaba up 1.4%.

Other stocks:

• Eli Lilly up 1.82%, Berkshire Hathaway B shares down 0.36%.

• Broadcom up 4.62%, Qualcomm up 1.78%, Adobe down 0.42%, Netflix down 0.71%, Oracle down 0.92%, Salesforce down 1.64%.

European markets closed at their lowest levels this year, down more than 6.1% from the all-time highs. France’s stock market fell nearly 1%, while Norway’s rose 0.3%.

Pan-European indices:

• STOXX 600 down 0.63%, at 594.92, down 6.14% so far in March.

• Euro Stoxx 50 down 0.61%, at 5,685.20, down 7.45% in March.

Country indices:

• Germany DAX 30 down 0.77%, at 23,409.37.

• France CAC 40 down 0.98%, at 7,915.36.

• UK FTSE 100 down 0.34%, at 10,249.52.

( Major European indices performance on March 9)

Sector and individual stocks:

• Among Eurozone blue chips, Volkswagen fell 2.40%, Ferrari, L’Oréal, EssilorLuxottica, Adidas, and Ates Group declined between 2.08% and 2.19%.

• All components of the STOXX 600 declined; Kinnevik dropped 16.97%, ArcelorMittal down 7.88%, Lufthansa down 6.38%.

US 10-year Treasury yield fell over 3.8 basis points, briefly dipping below 0.34% for the 2-year real yield. UK 2-year gilt yields narrowed their gains to 12 basis points.

US Treasuries:

• NY close: 10-year yield down 3.86 bps at 4.0996%, trading intraday between 4.2140% and 4.0919%.

• 2-year yield down 1.43 bps at 3.5462%, trading between 3.6330% and 3.54%.

( US key Treasury yields)

Eurozone bonds:

• Germany 10-year yield down 0.1 bps at 2.859%, trading between 2.928% and 2.853%. The 2-year German bond yield up 0.6 bps at 2.318%.

• UK 10-year yield up 2.0 bps at 4.647%. The 2-year gilt yield up 12.0 bps at 3.990%, remaining above 4.100% for most of the session before retracing gains from 21:00.

• France, Italy, Spain, Greece 10-year yields opened high and declined, with a maximum drop of 1.1 bps.

The dollar index briefly surged nearly 0.8%, approaching last November’s high, then retraced all intraday gains, down 1% from the high. Cryptocurrencies rebounded, recovering weekend losses, with Bitcoin up 2.63% intraday.

Dollar:

• NY close: ICE dollar index up 0.19% at 99.173, trading between 98.978 and 99.695.

• Bloomberg dollar index up 0.10% at 1204.63, trading between 1202.96 and 1211.49.

( Bloomberg dollar index)

Non-dollar currencies:

• NY close: EUR/USD up 0.16%, GBP/USD up 0.29%.

• Commodity currencies: AUD/USD up 0.73%, NZD/USD up 0.61%, USD/CAD flat.

JPY:

• NY close: USD/JPY up 0.08% at 157.91 yen, trading between 158.90 and 157.65 yen.

Offshore RMB:

• NY close: USD/CNH at 6.8875, up 125 points from last Friday’s NY close, trading between 6.9341 and 6.8853.

Cryptocurrencies:

• Rebounded, recovering weekend losses, with Bitcoin up 2.63%, Ethereum up 3.45%.

( Bitcoin price rally)

Crude oil (WTI) surged nearly 30%, approaching $120. Following signals from G7 countries about possible strategic reserve releases and Trump’s hint that the war is ending, oil prices plummeted. US crude tumbled over 31% from the daily high and down 7% from last Friday’s close, while Brent crude fell 4.67%.

Crude Oil:

• WTI April futures up $3.87, +4.26%, at $94.77/barrel.

( WTI futures)

• Brent May futures at $98.96/barrel.

Natural Gas:

• NYMEX April natural gas futures at $3.12/MMBtu.

Spot gold was pressured during the early sell-off but rebounded as the dollar retreated from highs, ending down 0.7% from last Friday. Spot silver reversed its intraday decline, rising over 3%. Among precious metals, spot palladium performed strongly, rising over 4%.

Gold:

• NY close: spot gold down 0.67%, at $5,137.24 per ounce.

( Gold spot price)

• COMEX gold futures down 0.26%, at $5,145.50 per ounce.

Silver:

• NY close: spot silver up 3.0%, at $86.9 per ounce.

• COMEX silver futures up 3.07%, at $86.885 per ounce, trading between $79.64 and $87.19.

Other metals:

• COMEX copper up 1.60%, at $5.90/lb.

• Spot platinum up 1.45%, spot palladium up 4.14%.

• LME copper up $92, at $12,954/ton.

• LME tin up $620, at $50,685/ton.

• LME aluminum down $60, at $3,386/ton.

Risk warning and disclaimer

Market involves risks; investment should be cautious. This article does not constitute personal investment advice and does not consider individual user’s specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Investment based on this information is at your own risk.