Just now! Israel launches massive airstrikes! Crude oil surges, US stocks plunge across the board!

Tensions in the Middle East continue to escalate, causing increased volatility in global financial markets.

Overnight, U.S. stocks suffered a broad sell-off, with all three major indices falling more than 1%. Large technology stocks declined across the board, and international oil prices surged sharply. By the close of trading, WTI crude oil futures and Brent crude oil futures both rose over 9%. Analysts point out that the escalation of conflict in the Middle East has triggered a sell-off in the U.S. stock market, as investors worry that the resolution of the conflict could be further delayed. Additionally, due to the ongoing surge in oil prices, markets are increasingly aware that the likelihood of a Fed rate cut later this year is rapidly decreasing.

Regarding the situation, according to CCTV News, on the evening of March 12, local time, the Israel Defense Forces announced the start of large-scale attacks on infrastructure in Tehran, Iran’s capital. The U.S. Central Command stated on the 12th that a U.S. KC-135 aerial refueling aircraft crashed in western Iraq during the period of U.S.-Israel military strikes against Iran. CENTCOM clarified that the incident was not caused by enemy fire or friendly fire.

U.S. Stocks Plunge Across the Board

On March 12, Eastern Time, U.S. stocks experienced a broad decline, with the Dow dropping over 739 points, a 1.56% decrease; the Nasdaq fell 1.78%; and the S&P 500 declined 1.52%. Except for the energy sector and some defensive stocks, most sectors faced heavy selling.

Large tech stocks in the U.S. also declined, with Tesla down over 3%, Meta down more than 2%, and Nvidia, Apple, Amazon, and Google down over 1%. Microsoft saw a slight decline.

Most popular Chinese concept stocks also fell, with the Nasdaq Golden Dragon China Index down 1.03%. Xiaopeng Motors dropped 4.7%, Li Auto fell over 2%, Alibaba and Pinduoduo declined over 1%. NIO rose over 1%, Xpeng Motors gained over 3%, and Fangdd Network soared over 16%.

On the news front, the first statement from Iran’s new Supreme Leader dashed hopes for a quick de-escalation, causing crude oil prices to surge close to $100 per barrel, intensifying inflation concerns and prompting investors to sell off stocks aggressively.

Ryan Detrick, Chief Market Strategist at Carson Group, said that the market has realized that the resolution of Middle East conflicts could be further delayed. Currently, the market’s sentiment is to sell first and consider fundamentals later. Apart from the energy sector, almost no other sectors are truly safe.

Oil prices surged again, with WTI crude for April delivery on the New York Mercantile Exchange rising 9.72% to $95.73 per barrel, and Brent crude for May delivery on the London ICE Futures rising 9.22% to $100.46 per barrel.

Iran’s new Supreme Leader, Moojtaaba Khamenei, stated that Iran will continue to adopt strategic measures, including blocking the Strait of Hormuz, and will attack U.S. military bases in the Middle East.

Meanwhile, the International Energy Agency (IEA) warned that the Iran conflict is causing the largest-ever disruption to oil supplies, heightening fears of rising inflation.

As the Strait of Hormuz’s daily transportation volume has plummeted from about 20 million barrels before the conflict to near halt, with limited rerouting options and increasing inventories, Gulf countries have reduced oil production by at least 10 million barrels per day. If shipping cannot resume quickly, supply losses could further increase.

White House Press Secretary Karine Jean-Pierre stated on Thursday that the Trump administration is considering a temporary exemption from the century-old Jones Act to ensure the free movement of energy and agricultural products between U.S. ports.

It is reported that the announcement of a 30-day exemption from the Jones Act could be made as early as Thursday, in response to the surge in fuel prices and other supply disruptions since the U.S.-Israel conflict with Iran began.

Trump: Rates Should Be Cut Immediately

On March 12, Eastern Time, President Trump again called on Federal Reserve Chair Jerome Powell to cut interest rates, saying the Fed should act immediately in response to the global economic shock caused by the Iran conflict.

Trump posted on social media: “Where is Jerome Powell, the Fed Chair who is always too late? He should cut rates immediately, not wait until the next meeting!”

The Fed will hold a monetary policy meeting on March 17. Although recent U.S. inflation data shows overall price growth remains manageable, the tense Middle East situation has significantly driven up oil prices and threatens global supply chains. U.S. public dissatisfaction with living costs continues to rise, which is not favorable for Republicans’ prospects of maintaining control of Congress in the midterm elections in November.

Markets generally expect the Fed to keep the benchmark interest rate unchanged, but their latest economic projections (SEP) will be closely watched for signals of whether inflation expectations are being raised.

Beneath the surface of rising oil prices, markets are realizing that the chances of a Fed rate cut later this year are rapidly diminishing.

Currently, traders have significantly reduced their bets on rate cuts this year. They no longer believe there is a 100% probability of a rate cut in 2026. Interest rate swaps tied to the Fed’s policy meeting date show that traders expect only a 24 basis point cut this year as of Thursday, down from about 30 basis points in late Wednesday trading, which is less than a quarter of a percentage point.

Regarding the situation, according to CCTV News, on the evening of March 12, local time, the Israel Defense Forces announced the start of large-scale attacks on infrastructure in Tehran. Around 10:10 PM Tehran time, CCTV reporters heard explosions in Tehran, and the air defense systems activated.

On the evening of the 12th, Israeli Prime Minister Benjamin Netanyahu held his first press conference since launching the large-scale airstrikes against Iran, defending the joint military action with the U.S.

Netanyahu stated that after nearly two weeks of Israeli-American airstrikes, Iran has “changed dramatically,” with the Iranian Islamic Revolutionary Guard Corps and Basij militia suffering heavy damage.

When asked about possible actions against Moojtaaba Khamenei and Hezbollah leader Naim Qassem, Netanyahu said he would not issue “life insurance policies” for them and that he “does not plan to detail plans or actions at this time.”

He also revealed that he “speaks with Trump every day,” and their communication is “frank and open.”