Donald Trump caused three major political shocks between July 6 and 11. He announced the end of the ceasefire with Iran, which led to a rise in the price of Brent crude by 5.2%. The US President also ordered a halt to trade with Spain, sending the Spanish IBEX 35 stock market index down 2.6%.
Finally, he supported tougher sanctions on Russia and allowed Ukraine to manufacture Patriot defense systems, creating New risks to energy and defense markets.
Trump ends the ceasefire in Iran
Trump said that the temporary agreement with Iran had “ended” after renewed attacks on commercial ships and American facilities in the Gulf. Then American forces launched new strikes Against Iranian targets.
Oil markets responded immediately. Brent rose 5.2%, while West Texas Intermediate crude gained 4.4% and reached its highest level in two weeks. The S&P 500 and Dow Jones indexes closed lower, while the STOXX 600 index recorded its largest decline since March.
Rising oil prices also pushed up Treasury yields as investors took into account rising inflation risks. Rising fuel costs could make it more difficult for the Fed to cut interest rates.
However, Trump later said that the United States would continue talks with Iran and played down the possibility of another large-scale war.
Markets will now focus on shipping through the Strait of Hormuz, which transports about a fifth of the world’s oil supplies.
Spanish trade threat hits stocks and bonds
Trump also ordered Treasury Secretary Scott Besent to halt trade and visits with Spain. He accused Madrid of failing to spend enough on defense and obstructing the US campaign against Iran.
Spanish markets fell sharply after these comments. The IBEX 35 lost 2.6%, making it the worst-performing major index in Europe on the day.
Santander shares fell by 4.3%, BBVA shares fell by 3%, and Zara owner Inditex shares fell by 3.6%. The yield on Spain’s 10-year government bonds rose nine basis points as investors demanded a higher yield to hold on to its debt.
It remains unclear whether Trump can impose a full bilateral ban. The European Union handles trade policy for its members, and trade between the United States and Spain has continued despite previous threats.
However, the prolonged uncertainty could affect Spanish banks, exporters, airlines and tourism companies.
Trump hardens his position on Russia
Trump made a major change on Ukraine during the NATO summit in Ankara. He said that the United States would license Ukraine to manufacture Patriot air defense systems, technology that Kiev had requested for years.
Days later, US Senators announced an agreement with the Trump administration to proceed more stringently Sanctions against Russia. The legislation could target countries that continue to buy Russian oil and gas.
The markets have not yet shown a clear reaction because Congress has not approved the final bill. Its impact will depend on the sanctions, exemptions and enforcement measures included in the final text.
Strong secondary sanctions could disrupt Russian oil flows to China, India and Turkey. This would put further pressure on energy prices as demand for alternative supplies increases.
At the same time, the Patriot decision could support defense manufacturers and suppliers. It also indicates that Washington may exert greater military and economic pressure on Moscow.
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