CNBC Daily Open: Trump followed up on his threat to strike Iran — will this help or harm his credibility?
The United States conducted airstrikes on three of Iran's nuclear sites on Saturday, entering Israel's war against Tehran. The timing was unexpected. On Thursday, U.S. President Donald Trump said he was still considering U.S. involvement and would arrive at a decision "within the next two weeks."
Financial and political analysts had largely taken that phrase as code word for inaction.
"There is also skepticism that the 'two-week' timetable is a too familiar saying used by the President to delay making any major decision," wrote Jay Woods, chief global strategist at Freedom Capital Markets.
Indeed, Trump has commonly neglected to follow up after giving a "two week" timeframe on major actions, according to NBC News.
And who can forget the TACO trade? It's an acronym that stands for "Trump Always Chickens Out" — which describes a pattern of the U.S. president threatening heavy tariffs, weighing down markets, but pausing or reducing their severity later on, helping stocks to rebound.
"Trump has to bury the TACO before the TACO buries him ... he's been forced to stand down on many occasion, and that has cost him a lot of credibility," said David WOO, CEO of David Woo Unbound.
And so Trump followed up on his threat, and ahead of the proposed two-week timeline.
"There will be either peace, or there will be tragedy for Iran far greater than we have witnessed over the last eight days," Trump said on Saturday evening.
But given Trump's criticism of U.S. getting involved in wars under other presidents, does America bombing Iran add to his credibility, or erode it further?
The U.S. strikes Iran U.S. President Donald Trump on Saturday said the United States had attacked Iranian nuclear sites, pushing America into Israel's war with its longtime rival. Secretary of Defense Pete Hegseth said Sunday that "Iran's nuclear ambitions have been obliterated," a sentiment echoed by Trump, who stressed that "Obliteration is an accurate term." The decision to attack Iran engages the American military in active warfare in the Middle East — something Trump had vowed to avoid.
Iran calls attacks 'outrageous'Iran's Foreign Minister Abbas Araghchi on Sunday said Tehran reserves all options to defend its sovereignty and people after the "outrageous" U.S. attacks on three of its major nuclear enrichment facilities. Iranian state-owned media, meanwhile, reported that Iran's parliament backed closing the Strait of Hormuz, citing a senior lawmaker. The U.S. on Sunday called on China to prevent Iran from doing so.
Investors assess U.S. attacksU.S. futures slid Sunday evening stateside as investors reacted to Washington's strikes on Iran. Futures tied to the S&P 500 lost 0.17%, Dow Jones Industrial Average futures fell 0.24% and Nasdaq 100 futures dropped 0.21%. On Monday, Asia-Pacific markets mostly fell at 1:45 p.m. Singapore time. Japan's Nikkei 225 slipped 0.15% and South Korea's Kospi Index retreated 0.3%. However, Hong Kong's Hang Seng Index bucked the trend to climb 0.29%.
Oil prices pare gainsU.S. crude oil were up 1.1% to $74.65 per barrel, while global benchmark Brent climbed 1.12% to $77.88 per barrel early afternoon Singapore time. The commodity pared gains from earlier in the day, when prices jumped more than 2% in oil's first trading session after Saturday's events. That said, multiple analysts raised the prospect of oil hitting $100 per barrel, especially if exports through the Strait of Hormuz are affected.
[PRO] Eyes on inflation reading Where markets go this week will depend on whether the conflict in the Middle East escalates after the U.S.' involvement. Investors should also keep an eye on economic data. May's personal consumption expenditures price index, the Federal Reserve's preferred gauge of inflation, comes out Friday, and will tell if tariffs are starting to heat up inflation.
Why global markets are brushing off U.S. strikes on Iran
The U.S. joining the war between Israel and Iran might seem like a geopolitical flash point that would send markets tumbling.
Instead, investors are largely shrugging off the escalation, with many strategists believing the conflict to be contained — and even bullish for some risk assets.
"The markets view the attack on Iran as a relief with the nuclear threat now gone for the region," said Dan Ives, managing director at Wedbush, adding that he sees minimal risks of the Iran-Israel conflict spreading to the rest of the region and consequently more "isolated."
Furthermore, rhetoric around the idea of shutting down the Hormuz waterway has been recurring from Iran, but it has never been acted upon, with experts highlighting that it is improbable.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Chicago Tribune
17 minutes ago
- Chicago Tribune
Oil flip-flops and shares are mixed after the US strikes Iranian nuclear sites
BANGKOK — Global markets appeared to take the U.S. strike against nuclear targets in Iran in stride as investors watched Monday to see how Iran will react. The price of oil initially jumped more than 2%, fell and then regained about half that much. U.S. stock futures edged lower and share benchmarks in Europe and Asia also were mostly lower. The attacks on three Iranian sites raised the stakes in the war between Israel and Iran and left questions about what remains of Tehran's nuclear program. It also increased the possibility that Iran might retaliate, potentially disrupting shipping through the narrow Strait of Hormuz, a waterway through which much of the world's crude oil passes. The big unknown is what Iran will do, analysts said. The price of Brent crude oil, the international standard, was up 1.2% at $77.91 per barrel. U.S. benchmark crude climbed 1.3% to $74.79. The future for the S&P 500 was little changed, while that for the Dow Jones Industrial Average was down 0.1%. Treasury yields were steady. In Europe, Germany's DAX lost 0.5% to 23,230.54 and the CAC 40 in Paris fell 0.6% to 7,541.25. Britain's FTSE 100 shed 0.2% to 8,761.53. Overall, there was no sign of panic. 'I believe what we are thinking is or the thinking is that it is going to be a short conflict. The one big hit by the Americans will be effective and then we'll get back to sort of business as usual, in which case there is no need for an immediate, panicky type of reaction,' said Neil Newman, managing director of Atris Advisory Japan. The conflict began with an Israeli attack against Iran on June 13 that sent oil prices yo-yoing and rattled other markets. Closing off the Strait of Hormuz would be technically difficult but it could severely disrupt transit through it, sending insurance rates spiking and making shippers nervous to move without U.S. Navy escorts. As a major oil producer, Iran may be reluctant to close down the waterway, which is used to transport its own crude, mostly to China. Oil is a major revenue source for the regime. 'The situation remains highly fluid, and much hinges on whether Tehran opts for a restrained reaction or a more aggressive course of action,' Kristian Kerr, head of macro strategy at LPL Financial in Charlotte, North Carolina, said in a commentary. Speaking to Fox News on Sunday, U.S. Secretary of State Marco Rubio said disrupting traffic through the strait would be 'economic suicide' and would elicit a U.S. response. 'I would encourage the Chinese government in Beijing to call them about that because they heavily depend on the Strait of Hormuz for their oil,' Rubio said. When asked about that at a routine briefing in Beijing, Chinese Foreign Ministry spokesperson Guo Jiakun told reporters in Beijing that 'China is willing to strengthen communication with Iran and relevant parties to continue playing a constructive role in promoting de-escalation' of the conflict. 'The Persian Gulf and its adjacent waters are important international channels for cargo and energy trade. Maintaining security and stability in this region serves the common interests of the international community,' he said. Tom Kloza, chief market analyst at Turner Mason & Co said he expects Iranian leaders to refrain from drastic measures and oil futures to ease back after the initial fears blow over. Disrupting shipping would be ' a scorched earth possibility, a Sherman-burning-Atlanta move,' Kloza said. Writing in a report, Ed Yardeni, a long-time analyst, agreed that Tehran leaders would likely hold back. 'They aren't crazy,' he wrote in a note to investors Sunday. 'The price of oil should fall and stock markets around the world should climb higher.' Other experts weren't so sure. Countries are not always rational actors and Tehran could lash out for political or emotional reasons, said Andy Lipow, a Houston analyst who has covered oil markets for 45 years. 'If the Strait of Hormuz was completely shut down, oil prices would rise to $120 to $130 a barrel,' Lipow said. That would translate to about $4.50 a gallon at the pump and hurt consumers in other ways, he said. Much of East Asia depends on oil imported through the strait. Taiwan's Taiex fell 1.4% while the Kospi in South Korea slipped 0.2%. In Tokyo, the Nikkei 225 edged 0.1% lower, with gains for defense contractors, oil companies and miners helping to make up for broad losses. 'The U.S. strike on Iran certainly is very good for defense equipment,' Newman of Atris Advisory said, noting that both Japan and South Korea have sizable military manufacturing hubs. Australia's S&P/ASX fell 0.4%. Hong Kong's Hang Seng regained lost ground, climbing 0.7%, while the Shanghai Composite index picked up 0.7%. In currency dealings, the U.S. dollar rose to 147.82 Japanese yen from 146.66 yen. The euro fell to $1.1464 from $1.1473.
Bloomberg
17 minutes ago
- Bloomberg
The Budget Bill Is Creating a Republican Existential Crisis
The Republican budget bill, a $3.7 trillion tax cut packaged with $1.2 trillion in spending cuts, is deeply problematic legislation from almost any perspective — including those of its authors. The Congressional Budget Office has the details about how it will be expensive and ineffectual. But for Republicans, President Donald Trump's 'big, beautiful bill' is creating what amounts to an existential crisis. For half a century, Republicans have been committed to the policy of lower taxes to aid the economy — impervious to any evidence that tax cuts are inefficient and prohibitively expensive. At this point, to walk away from the bill is to abandon their economic raison d'etre.
Bloomberg
17 minutes ago
- Bloomberg
Netherlands Defence Minister: NATO-wide 5% defence spend would be "historic"
Ruben Brekelmans, Netherlands Minister of Defence said they and their European partners support President Donald Trump's calls to encourage Iran to the negotiation table in order to "come to a sustainable solution". Speaking about the upcoming NATO meeting, he told Bloomberg's Oliver Crook "if we agree to 5% spending on core defence and defence-related matters, that would be a historic step" and said it would be of particular significance "if 32 allies in unity agree on this". (Source: Bloomberg)
