Oil prices plummet by nearly 4%, global stock markets fluctuate and adjust expectations for the US Iran nuclear agreement, causing market volatility

On Thursday (May 15th), international oil prices fell sharply due to positive signals in the US Iran nuclear agreement negotiations, with Brent crude oil futures falling below the $64 mark, a daily decline of nearly 4%. Meanwhile, after several weeks of rebound, global stock markets have entered a state of adjustment, and investors are gradually avoiding risky assets.

In the European market, the decline in energy prices dragged down stock market performance, with the Stoxx 600 index falling 0.2%. US stock index futures are under simultaneous pressure, with the S&P 500 index futures falling 0.6%, while the Nasdaq index has rebounded nearly 30% since its low in early April. The MSCI benchmark index in the Asian market also fell by 0.2%.

In early trading in New York, the stock prices of Nvidia, Palantir Technologies, and Tesla all fell by about 2%, after experiencing significant gains earlier this week. United Health Group's stock price fell 5%, influenced by a report by The Wall Street Journal that the company is facing a criminal investigation into medical insurance fraud.

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The reasons and impacts of the sharp decline in oil prices | | | Oil prices have reversed their recent upward trend. US President Trump, who is currently visiting the Middle East, said that the possibility of a US Iran agreement is "very close" and that Iran has accepted the terms of the agreement to some extent. Iran's top leader advisor Ali Shamhani confirmed to NBC that Iran has promised never to manufacture nuclear weapons and will clear its highly enriched uranium stockpile.

Iran, as the third largest oil producing country in OPEC, produces about 3 million barrels per day, accounting for approximately 3% of the global total production. Since the United States withdrew from the Iran nuclear agreement in 2015, Iran has been subject to strict sanctions. Affected by this news, European oil and gas stocks fell nearly 2%, and treasury bond of many oil producing countries also suffered.

Paul Hollingsworth, an economist at BNP Paribas, pointed out that the decline in oil prices has intensified the existing deflationary pressure in Europe and other regions, especially in the context of the ongoing trade tensions between China and the United States, where market sentiment remains volatile. He emphasized that the degree of sustained easing of the trade war and its structural impact on the market remain key variables.

In addition, the significant drop in oil prices has also dragged down the US dollar and benchmark US Treasury yields, with the 10-year US Treasury yield falling to around 4.5%. The bond market is also under pressure due to concerns about Trump's massive fiscal deficit plan.

Market sentiment and future outlook | | | Earlier this week, investors benefited from the "ceasefire" in US China trade and the investment agreement signed during Trump's Middle East visit, leading to a temporary rebound in global stock markets. But on Thursday, the market's optimism significantly decreased, and investors turned to wait-and-see.

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IG market analyst Tony Sycamore vividly stated that the market has entered a "hangover recovery period" after experiencing a "carnival party", waiting for the next wave of market trends to start. Although the US China trade agreement has eased some tensions, the uncertainty of Trump's trade policies still makes the market cautious about the global economic outlook.

Investors are now focusing on the speech to be delivered by Federal Reserve Chairman Powell, as well as the US retail sales data in April and Wal Mart's financial report to be released, so as to assess the consumer market situation. Economists generally expect retail sales growth to approach zero in April, reflecting a slowdown in consumer spending.

Michael Nizard, head of diversified assets at Edmond de Rothschild Asset Management, pointed out that the market is almost based on "perfect expectations" pricing, and retail sales data may show that business confidence is under pressure.

Powell's speech is seen as an important signal for the future path of interest rates. Point72 Asset Management founder Steve Cohen recently stated that the probability of a US economic recession is about 45%, but he does not believe that the Federal Reserve will immediately cut interest rates and is concerned that inflationary pressures from tariffs may persist. He predicts that the US economic growth may slow down to below 1.5% next year.

Foreign exchange market dynamics | | | In terms of the US dollar, the weekly uptrend did not continue, with the exchange rate against the Japanese yen falling 0.7% to 145.75, while the euro rose 0.3% to 1.12 US dollars. BNP Paribas analyst Hollingsworth predicts that the euro will eventually rise to 1.20 against the US dollar, and points out that US dollar assets are undergoing long-term structural capital outflows.

The Korean won market is volatile, and on May 5th, South Korean Deputy Minister of Finance Choi Ji young held a meeting with US Treasury officials to discuss the issue of the US dollar/Korean won exchange rate, indicating that regional financial stability is still highly concerned.

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