Donald Trump has a pain threshold, which is not measured in polls, but in the stock markets; in stock market prices, debt and raw materials. Thus, on a black morning in the international stock markets, Donald Trump has canceled his own ultimatum, which expired this morning, to announce Trump’s turnaround has been proportional to that of the markets; 180 degrees. The price of oil has plummeted to below $100 per barrel, while the Ibex, which fell 2.5%, has risen 1%. The markets have moderated their euphoria in the face of Tehran’s first responses: two different news agencies have disdained the words of the White House.
The prospect of a military escalation had frightened investors at the beginning of the week, the fourth of the conflict. Over the weekend, the president had given Tehran 48 hours to allow traffic through the Strait of Hormuz, threatening to attack Iranian electrical infrastructure in retaliation. In response, Tehran threatened to attack power and gas plants in the Gulf. “If the threats from Iran are carried out, a country that at this point has little to lose, the global economic scenario would become even more complicated, which would be reflected in new falls in the global bond and stock markets,” explains Juan José Fernández-Figares, director of analysis at Link Gestión. The Ibex reached the levels of the month of November, with a cumulative fall of 11% since the beginning of the attacks, oil for delivery in May touched 114 dollars and bonds, gold and silver fell sharply, in a session of massive sales that only benefited the dollar.
Now, on the contrary, the American president has announced that “the United States of America and the Islamic Republic of Iran have held very positive and productive conversations over the past two days regarding a complete and total resolution of our hostilities in the Middle East,” according to his publication in Truth. No responses from Tehran have been released at this time. “I have ordered the War Department to postpone any military attack on Iranian power plants and energy infrastructure for five days.”
It is not the first time that the market has to price a change of opinion by Donald Trump, communicated as always on his own social network, Truth. To the point that a word TACO has been coined (Trump always chickens outTrump always chickens out) for the moments when the president of the United States forgets bluster and threats and reverses decisions that were hurting the markets. It happened with the tariffs, it happened with the firing of Jerome Powell from the Federal Reserve, with the proposed annexation of Greenland and it is happening with the attack on Iran.
In today’s session, the case of oil brent is the most illustrative: according to data from the Bloomberg agency, it was trading at $113 at 12:05 Spanish time. At 12:08 it was trading at 96, a 15% drop in three minutes for one of the financial assets with the highest trading volume on the planet. The Ibex 35 has followed the same path, which went from 16,313 points at 12:05 to 16,995 at 12:11, 4.2% higher. The oscillation has also had its losers. Repsol plummets 7% after spending much of the session between gains and losses. And, on the opposite side of the scale, IAG rises 4%, with an intraday rise of 8%.
While waiting for Tehran to confirm possible talks, markets are interpreting the main turning point in a conflict that is entering its fourth week. Three or four weeks was, in fact, the deadline that analysts had pointed out, at the beginning of the attacks, for the hostilities to end and normality to return to the market. The prospect of a prolonged closure of the Strait of Hormuz and damage to the oil industry has caused a financial storm in fits and starts: as best-case scenarios faded, markets have come under pressure. Thus, since the beginning of hostilities, oil has skyrocketed by 42%, a percentage that this morning was 60%.
