DJI: Dow Jones Tumbles 300 Points After Trump’s Comments Shake Investor Confidence

US President’s remarks on the Mideast conflict sent investors for the exits while the US dollar gained across the board.

📉 Dow Jones Drops

• The Dow Jones Industrial Average DJI shed 300 points, or 0.7%, on Tuesday after President Trump sent a very threatening message to Iran. The Dow’s two peer benchmarks also slipped under the flatline with the S&P 500 wiping out 0.8% and the tech-dense Nasdaq Composite erasing 0.9%.
• “Everyone should immediately evacuate Tehran,” Trump said and followed up by threatening the Iranian leader. “We know exactly where the so-called ‘Supreme Leader’ is hiding. He is an easy target, but is safe there–We are not going to take him out (kill!), at least not for now.
• In his final remarks, and in his usual all-caps style, Trump demanded the “UNCONDITIONAL SURRENDER!” of Iran and its leader Ayatollah Ali Khamenei.

🚨 Markets Wary of US Involvement

• The change of mood came after a modest pullback in tensions. Following a calm weekend with no big headlines, America’s equity markets dashed higher on Monday with the Nasdaq booking a 1.5% gain.
• Uncertainty is back on the menu and this time it’s coming out of the US. That has more potential to keep traders on their toes as it means a possible expansion of warfare with the direct involvement of US forces. Up until now — six days deep into the attack on Iran — the US has been backing Israel’s defenses.
• The new chapter led to the advance of the US dollar across the forex board. The EURUSD pair lost its edge with the euro sliding more than 100 pips to dive under $1.15. The USDJPY climbed to levels near ¥145.00 after the Bank of Japan stayed put on interest rates earlier this week.

👀 Fed Decision Looms

• Looking ahead, war jitters are likely to keep a lid on optimism. But so is a hawkish message later today by Federal Reserve boss Jay Powell.
• The US central bank is set to update its interest rate and markets are pricing in no changes to borrowing costs. So that’s already baked in — but what’s not baked in, is Powell’s presser after the rate decision.
• Will the top central banker hint at an upcoming rate reduction — and finally please Trump, who’s been calling for one for months? Or will he be tight-lipped and just say that inflation needs to be around the Fed’s 2% goals before they cut? Remains to be seen — but for now, brace yourselves for volatility.