U.S. stock markets experienced continued declines on Friday, concluding a fifth consecutive week of losses, marking the longest downward trend in almost four years. The S&P 500 dropped by 1.7%, marking its worst performance since the onset of hostilities with Iran. The Dow Jones Industrial Average also fell by 1.7%, shedding 793 points and declining over 10% from its recent peak, while the Nasdaq composite declined by 2.1%.
Following the Nasdaq’s earlier dip into correction territory, the Dow’s recent losses have now confirmed a correction, defined as a 10% drop from a previous high. This week, the U.S. stock market experienced volatility as it oscillated between gains and losses on hopes surrounding the conflict resolution.
In contrast, the primary Canadian stock index managed to eke out modest gains, supported by strength in the basic materials sector. The S&P/TSX composite index closed up by 73.13 points at 31,960.65.
After the trading session on Thursday, President Donald Trump extended the deadline for potential military action against Iran’s power facilities to April 6, conditional on the resumption of oil tanker movements through the Strait of Hormuz. Although oil prices initially retreated in response to this announcement, they later resumed their upward trajectory, reflecting ongoing market uncertainties.
Despite Trump’s announcements, conflicts in the Middle East persisted, with Iran showing no signs of backing down and Israel threatening further escalation. The discord between the U.S. and Iran on diplomatic fronts has unnerved investors, leading to a diminished risk appetite in financial markets by the end of the week.
Oil prices surged, with Brent crude climbing by 3.4% to $105.32 per barrel, and U.S. crude rising by 5.5% to $99.64 per barrel. The escalating tensions have raised concerns about disruptions in oil and gas production in the Persian Gulf, potentially triggering global inflationary pressures.
If the conflict persists through June, analysts predict that oil prices could soar to a record $200 per barrel. On Wall Street, most stocks faced declines, with major tech companies bearing the brunt of the losses. The S&P 500 index currently stands 8.7% below its peak level, reflecting the broader market downturn.
Internationally, European markets followed a downward trend, mirroring mixed outcomes in Asian markets. Treasury yields fluctuated, with the 10-year Treasury yield reaching 4.48% before settling at 4.43%. The surge in yields has led to increased borrowing costs for households and businesses, potentially impacting economic growth.
Trump’s past decisions regarding tariffs and market reactions have drawn criticism, with some suggesting a tendency to retreat under market pressure. This dynamic has been highlighted as a factor affecting market sentiment and economic stability.
