The expectation of the US Iran nuclear agreement triggers a sharp drop in oil prices, and market risk aversion is heating up. Global stock markets are "stepping on the brakes" in the short term

International oil prices have plummeted by nearly 4%, and investors' risk aversion has risen, leading to a pullback in global stock markets after consecutive gains. The market's expectation of a potential nuclear agreement between the United States and Iran has intensified concerns about the recovery of crude oil supply, becoming the main driving force behind the sharp drop in oil prices.

Brent crude oil futures prices fell sharply, falling below $64 per barrel, reversing the gains of previous trading days. During his visit to the Middle East, US President Trump stated that the US and Iran are "very close" to reaching a nuclear agreement and that Iran has "to some extent" agreed to the terms of the agreement. At the same time, senior Iranian official Shamhani revealed to NBC that Tehran will commit to no longer manufacturing nuclear weapons and clearing its stockpile of highly enriched uranium.

As the world's third-largest oil producing country, Iran produces approximately 3 million barrels of oil per day and holds a significant share in the international energy market. Since the United States withdrew from the Iran nuclear deal in 2015, Iran has faced multiple sanctions and restricted crude oil exports. If the potential agreement is implemented, it will significantly affect the supply and demand structure of the global oil market.

Against this backdrop, the energy sector as a whole is under pressure, with European oil and gas stocks falling nearly 2% overall. The prices of government bonds of oil producing countries, including Angola and Nigeria, have also fallen in sync, reflecting the market's growing concerns about fiscal dependence on oil exporting countries.

Paul Hollingsworth, an economist at BNP Paribas, pointed out that the sharp decline in crude oil prices has put greater deflationary pressure on Europe, especially in the face of ongoing uncertainty in the US China trade relationship. "The current market sentiment is extremely vulnerable to various news fluctuations and lacks a clear direction." | | | In addition, the market is still paying attention to the Trump government's fiscal policy and the prospect of deficit expansion. The yield of US treasury bond bonds has declined to about 4.5%, reflecting investors' concern about the momentum of economic growth and the increased demand for risk aversion.

The three major risks in the market are hitting simultaneously. Although the trade suspension agreement reached between China and the United States has brought short-term boost to the market, after experiencing a rebound, the global stock market as a whole has entered a stage of adjustment. The European Stoxx 600 index fell 0.2%, and S&P 500 index futures fell 0.6%. Previously, the Nasdaq index had rebounded nearly 30% since its low point in early April, with clear signs of short-term overheating on a technical level.

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In the US market, technology stocks have generally experienced a pullback. Nvidia, Palantir, and Tesla's stock prices all fell more than 2% in early trading in New York. Medical insurance giant United Health Group fell 5% as it faces criminal investigation for alleged fraud.

The focus of the market is gradually turning to the speech to be delivered by Federal Reserve Chairman Powell, the US retail sales data and the financial report of retail giant Wal Mart, which will become an important wind vane to measure the US consumer confidence and economic health.

Michael Nizard, head of diversified assets at Edmond de Rothschild Asset Management, stated that current market pricing reflects "almost perfect expectations," and even a slight deviation could trigger severe volatility. If retail data is weak, it will exacerbate market concerns about an economic slowdown or even recession. "Steve Cohen, founder of Point72 and billionaire investor, warned at the Sohn conference that the probability of the United States falling into an economic recession has reached 45%. He expects that although the Federal Reserve may not immediately cut interest rates, economic growth will slow down to 1.5% or lower next year.

The trend of the US dollar has fallen into structural adjustment. In terms of the exchange rate market, the US dollar has not been able to continue its previous rebound trend. On Thursday, the US dollar fell 0.7% against the Japanese yen to 145.75; The euro rose 0.3% against the US dollar to 1.12.

Analysts from BNP Paribas pointed out that the US dollar is entering a long-term structural adjustment cycle, and it is expected that the euro will rise to 1.20 against the US dollar in the future. This is not only a short-term trend, but also a signal of continuous outflow of US dollar asset allocation funds. In addition, the Korean won market has fluctuated violently for the second consecutive day. It is reported that South Korean Deputy Minister of Finance Choi Ji young held talks with US Treasury official Kapros on May 5th, exchanging views on the fluctuation of the Korean won against the US dollar, indicating that the South Korean government is also closely monitoring market stability issues.

Conclusion: The global market has entered an "observation period" | | | After experiencing an upward trend driven by the easing of tensions between China and the United States and the rebound of technology stocks, market sentiment has once again become cautious. The combination of multiple macro risk factors has led investors to reassess the global economic outlook. The US Iran relationship, oil price fluctuations, Federal Reserve policy direction, and corporate financial performance will become key variables affecting the market's next stage of development.

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