Japan
At the New York stock market on the 4th, buying pressure dominated on the view that the U.S. economy is maintaining solid momentum, with the Dow Jones average closing up more than 230 dollars. This finally halted the downward trend from the previous trading day; however, overall market conditions remain fraught with uncertainty.
According to Federal Reserve district bank reports, the broader U.S. economy is confirming gradual expansion across seven districts, with the economic outlook showing an overall optimistic tendency. This has served as a supportive factor for the equity market and has contributed to improved investor sentiment. However, simultaneously, several Federal Reserve presidents are signaling differing policy stances. The Cleveland Federal Reserve president supports maintaining interest rates while noting that inflation outlooks remain elevated, while a Milan Federal Reserve official advocates for continued rate cuts within the year. That official assesses Iran-related impacts as limited.
The primary factor escalating market anxiety is the rapid deterioration of the Iran situation. Iran launched ballistic missiles into Turkish territory, and Turkey activated NATO air defense systems to intercept them, significantly heightening military tensions in the Middle East region. An independent investigative team has pointed out that Iran's military actions constitute violations of the UN Charter, resulting in numerous civilian casualties including school attacks. The Trump administration, through a statement by the Secretary of Defense, has confirmed the killing of Iranian operatives and declared its intention to continue operations as necessary.
These Middle Eastern military conflicts are directly impacting energy markets. The U.S. Treasury Secretary has made a series of announcements regarding energy to signal intent to stabilize crude oil supply disruptions. Surging energy prices impose inflationary pressure on the global economy as a whole, prompting authorities to work urgently to ensure stable supplies. Meanwhile, Russian President Putin has hinted at the possibility of an immediate halt to gas supplies to Europe, further complicating geopolitical tensions surrounding energy.
An additional concern emerging is trade policy. The U.S. Treasury Secretary has announced plans to raise global tariffs to 15 percent within the week, with intentions to return to previous levels within five months. This abrupt shift in tariff policy could cause significant disruption to global supply chains and is becoming a source of concern regarding market outlook.
The current market environment presents a complex situation where solid U.S. economic fundamentals coexist with geopolitical risks and the threat of new protectionist policies. The equity market is fluctuating as it attempts to navigate this balance, and investors must closely monitor future policy developments and the evolution of Middle Eastern conditions.