U.S. stocks fall as oil prices surge… Trump: ‘Countries that use the Strait of Hormuz should be held responsible’ [Morning Briefing]

◆Wall Street falls on a spike in global oil prices

All three major U.S. stock indexes closed lower. On the 18th (local time), the Dow Jones Industrial Average ended down 1.63% from the previous session at 46,225.15, the S&P 500 fell 1.36% to 6,624.70, and the Nasdaq Composite dropped 1.46% to 22,152.52. The decline was attributed to a surge in global oil prices after reports of attacks on energy facilities in the Middle East, even as the U.S. central bank (Fed) kept its policy rate unchanged. A sharp rise in the U.S. Producer Price Index (PPI) and hawkish remarks by Fed Chair Jerome Powell also amplified the losses. The day’s drop marked the biggest decline on a Fed rate-decision day since Dec. 18, 2024.

◆Fed holds rates at 3.5–3.75% for a second straight meeting

The Fed held its benchmark interest rate at 3.50–3.75% at the Federal Open Market Committee (FOMC) meeting held that day. After cutting rates three consecutive times by 0.25 percentage point each from September through December last year, the Fed has now kept rates unchanged for a second straight meeting, following January. In its statement, the Fed said the implications of developments in the Middle East for the U.S. economy are uncertain. Still, it projected the median policy rate at year-end at 3.4%, unchanged from its December forecast. This is interpreted as meaning the Fed could cut rates once within this year.

◆Trump: ‘What would happen if countries using the Strait of Hormuz were held responsible?’

U.S. President Donald Trump argued that he is curious what would happen if countries that use the Strait of Hormuz were made responsible in relation to a military operation against Iran and control of the strait. Trump wrote on his social media platform Truth Social on the morning of that day, saying that “some of our unresponsive allies will start moving quickly,” making the claim. Previously, Trump floated the idea of a ‘Hormuz coalition’ in which a multinational force would escort merchant ships in the Strait of Hormuz, and has pressed Europe, South Korea and Japan to join. The move is seen as an attempt to step up pressure for support.

◆Oil prices jump as Iran threatens retaliation against energy facilities

Global oil prices surged after Israel bombed Iran’s largest gas field and Iran threatened retaliation against energy facilities in neighboring countries. As of 4:40 p.m. on the 18th (local time), West Texas Intermediate (WTI) futures on the New York Mercantile Exchange were up 4.13% at $100.22 a barrel, reclaiming the $100 level. Brent crude futures soared 7.75% to trade at $111.40 a barrel. Israel said it had attacked Iran’s largest gas facility, while Iran countered by saying it would strike oil facilities in Saudi Arabia, the United Arab Emirates and Qatar, sending prices sharply higher. Some forecasts said Brent could top $130 within days. The all-time high is $147, set during the 2008 financial crisis.

◆Filibuster showdown expected over ‘Major Crimes Investigation Agency/Prosecution Office bill’ at plenary session

The National Assembly will hold a plenary session on the afternoon of that day to move forward with legislation. The Democratic Party of Korea plans to pass bills to establish a Major Crimes Investigation Agency and a Prosecution Office, as well as a plan for a parliamentary investigation into the ‘Yoon Suk Yeol administration fabricated indictment allegations case.’ The People Power Party is opposing the move, calling them “patchwork bills that would concentrate power and collapse the criminal justice system” and “pressure on prosecutors to withdraw indictments related to allegations against President Lee Jae-myung.” If the Democratic Party proceeds with passage of the bills, the People Power Party is expected to respond with a filibuster. The Democratic Party is also expected to try to pass one bill per day, suggesting a filibuster standoff could continue for at least three nights and four days.

◆Nationwide morning temperatures below freezing… day-night gap up to 20°C

On Thursday, the 19th, morning temperatures in most parts of the country are expected to drop below freezing, with a large day-night temperature swing. The gap between daytime highs and nighttime lows is forecast to widen to between 15°C and 20°C. Daytime highs will range between 8°C and 16°C. Skies will be mostly clear nationwide, though along the southern part of Gangwon’s east coast, some places may see light raindrops of less than 0.1 mm between 6 a.m. and noon. Fine dust levels are forecast to be “moderate” nationwide. However, Sejong and North Chungcheong Province are expected to be “unhealthy” until dawn, while Daegu and North Gyeongsang Province are expected to be “unhealthy” from late dawn through morning.

Shin Yong-hyun, Hankyung.com reporter yonghyun@hankyung.com