The US military plans to strike Iran; oil prices soar to a four-year high; Nasdaq futures give up gains; Asian currencies plunge; corn and wheat both rise.

Brent crude hits a nearly four-year high, the Federal Reserve stays hawkish yet unmoved and reveals internal disagreements, and tech giants' earnings are mixed—on Thursday, global markets were hit by violent shocks from multiple directions, and investors struggled to find direction between escalating geopolitics, expectations of tighter monetary policy, and the narrative of AI-driven growth.

On Thursday the 30th, Brent crude surged as much as 7.1% to $126.41 a barrel, the highest since June 2022, rising for a ninth consecutive day in the longest streak since May 2022, with year-to-date gains exceeding 100%. According to CCTV International, the US military on Thursday reported the latest plans to strike Iran to President Trump. Meanwhile, Trump stated he rejected Iran's conditions for peace talks and will maintain the maritime blockade of the Strait of Hormuz.

The Federal Reserve announced on Wednesday it would keep rates unchanged, but both the statement and internal remarks had a hawkish tone. Powell’s press conference became his final one as Fed Chair, as the US Department of Justice had earlier dropped a controversial criminal investigation into the Fed, clearing the way for Senate confirmation of Kevin Warsh as the next chair. Powell said he would continue to stay as a Fed Governor. Soaring oil prices, together with the Fed’s hawkish stance, suppressed demand for fixed income assets. The yield on the US 10-year Treasury remained near recent highs, while Japan’s 10-year government bond yield also rose to the highest since 1997.

In tech stocks, strong earnings from Alphabet and Amazon initially pushed Nasdaq 100 futures up 1.1%, but gains were wiped out. The MSCI Asia Pacific Index fell 1.4%, European stocks were expected to open about 1% lower. The dollar strengthened; multiple Asian currencies dropped to historical lows, and agricultural product markets soared across the board due to war premiums.

Korea’s KOSPI fell 1%, Samsung Electronics dropped 1.8%. Nikkei 225 fell 1%, Topix down 1.5%.India’s Nifty and Sensex indices both fell 1% intraday.Nasdaq 100 futures turned flat after previously rising 1%. Alphabet surged over 7% after hours, Amazon climbed about 2.7%, Microsoft edged up 0.3%; Meta Platforms dropped 7%.US 10-year treasury yield rose 1.4 bps to 4.429%. US 30-year treasury yield rose 1.7 bps to 5.003%.Japan's 20-year bond yield rose 10 bps to 3.405%. 30-year bond yield rose 10 bps to 3.74%.The yen briefly fell through 160 to the dollar to 160.47, hitting a new low for the year, and markets generally expect Japanese authorities may intervene around this level.Euro/dollar fell to 1.1656, a three-week low.The Indian rupee hit a record low against the dollar. The dollar/rupee briefly gained 0.3% to 95.1263, surpassing the late-March high of 95.1250.Spot gold rose 0.39% to $4,561.13.Brent crude surged as much as 7.1% to $126.41 a barrel, the highest since June 2022, for a ninth consecutive rise, the longest streak since May 2022 and up more than 100% year-to-date.Chicago Board of Trade corn futures rose to $4.7925 per bushel, near a four-year high and up for four straight days.Bitcoin fell 0.2% to $75,473.49.

Rising Risk of Military Escalation: Oil Market Shifts from Optimism to Reality

This sharp rise in oil prices reflects the market's shift from overly optimistic expectations about the Middle East situation to repricing the real risk of supply disruption. ING analysts wrote in a client note, "The oil market has shifted from excessive optimism to facing up to the reality of supply disruptions we see in the Gulf region."

According to Axios, US military commanders plan to brief Trump on options for a "short, powerful" airstrike on Iran to break the deadlock in negotiations. Trump also stated that unless a nuclear deal is reached, the maritime blockade of Iranian ports will remain. Brent crude June futures rapidly rose more than 4% past $122, a new high since the Iran war.

Bloomberg strategist Mark Cranfield noted that multi-asset moves are beginning to closely mirror those in March—stocks and bonds falling together, oil and the dollar rising. He said market sentiment initially worsened earlier when Axios reported Trump contemplating another escalation in the Middle East.

Rodrigo Catril, a strategist at National Australia Bank in Sydney, said: "Oil prices rising during the Asian hours, US considering military action against Iran, coupled with European markets digesting this news in the morning, is depressing overall market sentiment."

Fed’s Hawkish Disagreement Exposed, Rate Cut Expectations Nearly Gone

The Fed’s decision Wednesday to keep the federal funds rate target range unchanged also revealed deeper internal disagreement than before. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan all supported holding rates, but opposed adding any dovish language to the statement. Board member Stephen Miran voted dissent, supporting a rate cut.

Traders have almost fully abandoned bets on a rate cut this year and are beginning to price in the possibility of a rate hike in 2027.

Angelo Kourkafas of Edward Jones said: "Three dissenting votes over the language signal the Fed’s stance is marginally more hawkish, and some officials are preparing for inflation to persist at high levels for longer. We expect the Fed to firmly stay on hold in the coming months."

This meeting was also Powell's last policy press conference. The DOJ's earlier dropping of its controversial criminal probe cleared the procedural way for Kevin Warsh to become next Fed chair. Powell said he would remain as a Fed Governor.

Spot gold rose 0.39% to $4,561.13.

Tech Earnings Diverge, AI Narrative Masks Deeper Pressures

The tech giants’ dense earnings season has given markets a brief respite. Alphabet rose more than 7% after hours, Amazon up 2.7%, Microsoft edged up 0.3%; Meta Platforms fell 7%. Apple will report results Thursday, the week’s most-watched earnings event.

In Asia, the AI-driven rally has partly masked the broader market impact of a US-Iran war. South Korea’s Kospi is on track for its best monthly performance since 1998; Taiwan’s Taiex could mark the strongest month since 2001, led by TSMC and other AI supply chain stocks.

However, Saxo Markets chief investment strategist Charu Chanana warns:

"AI is providing the market a structural growth story, but oil is translating geopolitics into structural inflation risk. Given some crowded tech positions, the market can’t rely solely on strong earnings to support valuations."

Barclays’ head of emerging market macro strategy, Mitul Kotecha, bluntly said there’s obvious disconnect between stock markets and macro reality: "Tech and AI euphoria is making a comeback, ignoring all other risks."

Multiple Asian Currencies Hit Record Lows, Limited Central Bank Room for Intervention

Oil above $120 a barrel is putting severe pressure on some of Asia’s most vulnerable currencies, with the Indonesian rupiah, Philippine peso, and Indian rupee all falling to record low regions, ranking among the worst performers in Asia since the US-Iran war broke out two months ago. On Thursday both the rupiah and rupee fell more than 0.3% against the dollar, while the peso also neared a record low.

The root of the selling pressure is these countries’ heavy reliance on imported oil. Soaring energy prices directly amplify inflation pressures and fuel concerns about widening current account and fiscal deficits, leaving central banks caught between supporting the economy and controlling inflation.

BNY strategist Wee Khoon Chong said, central banks may recalibrate their currency intervention strength to save reserves, and high oil prices are key to deciding intervention aggressiveness.

Central banks have moved: India’s RBI introduced a special USD swap window for refiners and restricted the most common offshore rupee trading tool to curb speculation; Indonesia’s central bank declared readiness to step up intervention and tightened rules on currency purchases to stem capital outflows; the Philippines’ central bank signaled willingness to curb inflation through consecutive small rate hikes.

But analysts believe these efforts will be limited until prospects for an end to hostilities become clear. MUFG Bank strategist Lloyd Chan wrote Thursday: "More credible de-escalation signals are needed to truly ease depreciation pressure."

The yen’s pressures have also caught the market’s eye. The yen/dollar briefly broke below 160 to 160.47, a new yearly low, and markets generally expect Japanese authorities may intervene nearby. The yen’s slide comes as the BOJ Wednesday held rates at 0.75%, further increasing tension between policy and market pressure.

War Premium Spreads to Agricultural Products, Corn Leads Commodities

The impact of Middle East conflict has spread from energy to agricultural commodities. Chicago’s corn futures main contract rose to $4.7925 per bushel, near a four-year high, up for four days in a row. Bloomberg Intelligence analysts Jason F. Miner and Ama Kyerewaa pointed out in a report that the conflict is pushing up US corn production costs from chemical inputs, mid-season fertilization, to diesel irrigation, and forecast prices could top $5 per bushel in Q4 this year. At the same time, farmers in the US and Europe’s main production regions are cutting corn acreage in favor of less fertilizer-intensive crops to save costs.

The Bloomberg Spot Agriculture Index, tracking the world’s ten top-traded crops, rose to its highest since November 2023. Wheat is on track for another weekly gain, driven by war premium and ongoing drought in the US plains; soybeans are boosted by soybean oil and by increased demand for biofuel alternatives as oil prices rise due to the Hormuz blockade.

Joe Davis, commodities director at Futures International, said: "This strength is attracting persistent inflows. When prices hit new highs, futures-tracking ETFs will also move higher, and continued index buying further supports the futures market."

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