After the A-share market closed on October 9, overseas markets tumbled across the board, with European stock markets and U.S. index futures falling collectively, while oil prices surged.
On the news front, a bearish development emerged regarding U.S.-Iran tensions. U.S. President Trump stated on Wednesday that he no longer wishes to reach a deal with Iran. Earlier reports indicated that U.S. forces were preparing for a possible military strike against Iran, with action likely to unfold before the U.S. midterm elections.
Speaking at a campaign rally alongside Republican candidates in San Antonio, Texas, on Wednesday evening local time, Trump said: "I think reaching a deal is no longer something I really want to do, but they are willing to offer anything to stop us from taking action." NBC reported on Wednesday, citing a U.S. official and another person familiar with the matter, that Trump and his national security team had discussed the possibility of resuming large-scale military operations against Iran in the coming weeks. Axios reported earlier that day that if armed conflict between the U.S. and Iran reignites, American forces could carry out "massive bombing" against Iran's energy facilities, infrastructure, and nuclear targets. The report also noted that an escalation in military action could affect the outcome of the upcoming U.S. midterm elections.
As gasoline and diesel prices soar, driving up the cost of living, Trump's approval rating has fallen to a historic low. Although oil exports from the Middle East are recovering to near pre-war levels, international crude oil prices remain elevated. According to data from energy data analytics firm Kpler, crude oil shipped from the Persian Gulf (excluding Iran), combined with related exports from Saudi Arabia and the United Arab Emirates, currently totals approximately 18.5 million barrels per day, close to pre-conflict levels. Kpler's chief shipping analyst, Matt Wright, said: "Restoring normal shipping no longer requires waiting for both sides to reach an agreement." He expects that even if the conflict persists, Middle East oil shipments will continue to recover, though the process will be slower and more uneven. The recovery in shipping activity will rely more on operational adjustments and adaptation rather than waiting for a diplomatic breakthrough.
Affected by the news, bond yields climbed accordingly, with the U.S. 10-year Treasury yield rising to 5.334%. The spread between French and German 10-year government bond yields widened to 140 basis points. Global bond yields are currently at multi-decade highs, while companies driving global AI infrastructure development are issuing billions of dollars in bonds to raise funds for massive investments. Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "It is clear that rising yields have not slowed the AI investment frenzy, but it also means that whether these massive investments ultimately pay off is becoming increasingly important. Corporate earnings will remain key to determining whether the tech stock rally can continue."
Meanwhile, rising oil prices are making the market outlook more complicated. The Federal Reserve just raised rates last month, and higher oil prices are further intensifying inflationary pressure. Money markets currently see about a 20% probability of another Fed rate hike this month and have fully priced in one more hike before December. One analyst said: "Another rate hike is very likely this year, because current monetary policy is not particularly restrictive. Given that inflation remains above target and most economic activity indicators remain strong, maintaining price stability has become the Fed's most important policy task."