Donald Trump presented three major policy challenges between July 6 and July 11. He announced that Iran will stop fighting, sending Brent oil 5.2%. POTUS also ordered a freeze on trade with Spain, pushing Spain’s IBEX 35 stock market down 2.6%.
Finally, he supported tough sanctions on Russia and allowed Ukraine to manufacture Patriot defense equipment, and manufacture new risk for energy and security markets.
Trump Ends Iran Ceasefire
Trump said the long-standing deal with Iran is “over” after another attack on US merchant ships and weapons in the Gulf. The American military launched new demonstrations against Iranian targets.
Oil markets reacted immediately. Brent settled 5.2% higher, while WTI gained 4.4% to a two-week high. The S&P 500 and the Dow closed lower, while the STOXX 600 posted its lowest since March.
The rise in oil prices led to higher Treasury yields while investors became more vulnerable to inflation. Higher oil prices could make it harder for the Federal Reserve to lower interest rates.
However, Trump later said the US would continue negotiations with Iran and played down the prospect of another major war.
Markets now focus on shipments through the Strait of Hormuz, which carries a fifth of the world’s oil.
Spain Trade Threat Hits Stocks and Bonds
Trump also ordered Treasury Secretary Scott Bessent to freeze trade and travel with Spain. He criticized Madrid for failing to spend enough on defense and hindering the US campaign against Iran.
Spanish markets fell sharply after the comments. The IBEX 35 lost 2.6%, making it the biggest index in Europe on the day.
Shares in Santander fell 4.3%, BBVA fell 3% and Zara owner Inditex fell 3.6%. Spain’s 10-year-old government defaulted on nine of its loans as investors sought to recoup more debt.
It remains unclear whether Trump will be able to impose a full ban on two countries. The European Union oversees the trade policies of its members, and US-Spain trade has continued despite previous threats.
However, long-term uncertainty could weigh on Spanish banks, exporters, airlines and the tourism industry.
Trump is Hardening His Position on Russia
Trump made major changes to Ukraine at the NATO summit in Ankara. He said the US would give Ukraine permission to build the Patriot air defense system, which Kyiv technology has been asking for for years.
A few days later, US senators announced a deal with the Trump administration to advance it sanctions against Russia. The law could target countries that continue to buy Russian oil and gas.
Markets have yet to show clarity as Congress has yet to approve a final bill. The outcome will depend on the penalties, amnesty and enforcement included in the final statement.
Stronger secondary sanctions could divert Russian oil to China, India and Turkey. This could also put pressure on energy prices as demand for other products increases.
Meanwhile, the Patriot concept can help defense manufacturers and suppliers. It also shows that Washington can exert more military and economic pressure on Moscow.
A note 3 Trump Moves That Shook the Markets This Week appeared for the first time BeInCrypto.
