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Donald Trump delivered three major policy shocks between July 6 and July 11. He declared the Iran ceasefire over, sending Brent crude oil up 5.2%. The POTUS also ordered a halt to trade with Spain, pushing Spain’s stock market index IBEX 35 down 2.6%.
Lastly, he backed tougher Russia sanctions and allowed Ukraine to manufacture Patriot defence systems, creating fresh risks for energy and defence markets.
Trump Ends the Iran Ceasefire
Trump said the interim agreement with Iran was “over” after renewed attacks on commercial ships and US facilities in the Gulf. American forces then launched fresh strikes against Iranian targets.
Oil markets reacted immediately. Brent settled 5.2% higher, while WTI gained 4.4% and reached a two-week high. The S&P 500 and Dow closed lower, while the STOXX 600 recorded its steepest decline since March.
The surge in oil also pushed Treasury yields higher as investors priced in greater inflation risk. Higher fuel costs could make it harder for the Federal Reserve to lower interest rates.
However, Trump later said the US would continue talks with Iran and played down the prospect of another full-scale war.
Markets will now focus on shipping through the Strait of Hormuz, which carries around one-fifth of global oil supply.
Spain Trade Threat Hits Stocks and Bonds
Trump also ordered Treasury Secretary Scott Bessent to halt trade and visits with Spain. He accused Madrid of failing to spend enough on defence and obstructing the US campaign against Iran.
Spanish markets fell sharply after the comments. The IBEX 35 lost 2.6%, making it Europe’s worst-performing major index that day.
IBEX 35 is Spain’s Benchmark Stock Market Index in Madrid. Source: Yahoo FinanceSantander shares dropped 4.3%, BBVA fell 3% and Zara owner Inditex declined 3.6%. Spain’s 10-year government bond yield rose nine basis points as investors demanded a higher return for holding its debt.
It remains unclear whether Trump can impose a complete bilateral embargo. The European Union handles trade policy for its members, and US-Spain commerce has continued despite earlier threats.
Still, prolonged uncertainty could weigh on Spanish banks, exporters, airlines and tourism companies.
Trump Hardens His Position on Russia
Trump made a significant shift on Ukraine during the NATO summit in Ankara. He said the US would license Ukraine to manufacture Patriot air-defence systems, technology Kyiv has requested for years.
Days later, US senators announced an agreement with the Trump administration to advance tougher sanctions against Russia. The legislation could target countries that continue buying Russian oil and gas.
Markets have yet to show a clear reaction because Congress has not approved the final bill. Its impact will depend on the sanctions, exemptions and enforcement measures included in the final text.
Strong secondary sanctions could disrupt Russian oil flows to China, India and Turkey. That would place further pressure on energy prices while increasing demand for alternative supplies.
Meanwhile, the Patriot decision could support defence manufacturers and suppliers. It also signals that Washington may apply greater military and economic pressure on Moscow.
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