U.S. stock index futures for the three major averages fell collectively in pre-market trading on Thursday, April 2. At the time of writing, Dow Jones futures were down 1.32%, S&P 500 futures declined 1.49%, and Nasdaq futures dropped 1.98%.
Major European indices also saw declines. Germany's DAX index fell 2.24%, the UK's FTSE 100 dropped 0.44%, France's CAC 40 decreased 1.31%, and the Euro Stoxx 50 index was down 2.23%.
Oil prices jumped significantly. WTI crude rose 9.66% to $109.79 per barrel, while Brent crude increased 7.93% to $109.18 per barrel.
Former President Trump's强硬 statements negatively impacted market hopes for a ceasefire. In a speech Wednesday evening, Trump claimed a "swift, decisive, and overwhelming victory" in the conflict with Iran, stating that core U.S. strategic objectives were "nearing completion." He declared, "The Iranian navy has been completely destroyed, and its air force and missile programs have been severely degraded." However, subsequent remarks alarmed markets. Trump indicated that "over the next two to three weeks, we will hit them with extremely forceful strikes... while negotiations are also underway." He added that if no agreement is reached with Iran within this timeframe, U.S. forces would target key Iranian infrastructure, including power plants and potentially oil facilities, with severe intensity. These comments dampened market expectations for a quick resolution to the Middle East conflict.
U.S. Treasury yields moved higher. The 10-year yield rose nearly 5 basis points to 4.368%, while the 2-year yield increased over 4 basis points to 3.846%. The U.S. Dollar Index (DXY) gained 0.6% to 100.25. Spot gold fell nearly 3% to $4,627.66 per ounce, and spot silver dropped over 5% to $70.95 per ounce.
The prolonged Middle East conflict, now in its fifth week, is fostering a "weekend fear" pattern in U.S. stocks, particularly for the S&P 500, leading to significant sell-offs on Thursdays and Fridays. Since the conflict began, the index has gained in the first three trading days of the week but subsequently fallen 9% combined on Thursday and Friday. Analysts suggest investors reduce equity exposure ahead of the weekend due to the risk of significant geopolitical developments during the market closure.
Bank of America warned that the Iran conflict is creating a "stagflation bomb" for the global economy, predicting slower growth, higher inflation, and sustained oil prices around $100 per barrel for the rest of the year, even if the conflict ends soon. The bank's economists noted a "mild stagflation" effect so far and cautioned that an escalation could lead to a global recession. While they still expect the Federal Reserve to cut rates by 50 basis points this year, the timing has been pushed back to the autumn, with high risks that these cuts might not materialize.
Despite recent declines, Standard Chartered predicts gold prices will resume their upward trend and challenge record highs again. The bank's analyst noted that gold often faces initial selling pressure for liquidity reasons during crises, typically lasting 4-6 weeks. While the current drop is sharper, overheated positions have largely been cleared. Structural drivers for gold, such as concerns over high debt, currency debasement, and geopolitical risks, remain intact. The 200-day moving average is seen as a strong support level.
Goldman Sachs warned of long-term upside risks to global aluminum prices due to supply disruptions in the Middle East, a key production region accounting for one-fifth of global output outside China. The conflict, including the shutdown of a major facility, complicates expected capacity growth in the region, potentially leading to sustained higher prices.
The Trump administration is expected to announce steep tariffs, potentially up to 100%, on pharmaceutical companies that have not agreed to maintain low drug prices in the U.S. market, citing national security. Major firms like Pfizer, AstraZeneca, and Eli Lilly are among those that have already reached pricing agreements.
Trading Note: U.S. markets will be closed on Friday, April 3, for Good Friday. Trading will resume on Monday, April 6.
**Individual Stock News** Berkshire Hathaway (BRK.A) has hired banks to arrange its first yen bond issuance since last November, sparking speculation about its investment plans in Japan. The potential issuance comes as the market anticipates the Bank of Japan may raise interest rates as soon as April.
Private equity firm KKR (KKR) has raised approximately $23 billion for its latest North American buyout fund, marking the largest fund of its kind ever raised, despite a challenging environment for the industry.
TotalEnergies (TTE) and UAE's Masdar have formed a $2.2 billion renewable energy joint venture. The combined entity will have 3 GW of operational capacity and 6 GW in late-stage development across nine Asian countries, focusing on solar, wind, and energy storage projects.
**Key Economic Data & Events Schedule** * 20:30 Beijing Time: U.S. Initial Jobless Claims for the week ending March 28 * 22:15 Beijing Time: Speech by 2026 FOMC voter and Dallas Fed President Lorie Logan
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