U.S. stocks plummeted 800 points, oil prices broke $100! Iran's warning escalates, global markets sound the alarm

(Source: Business Observation)

In the early hours of March 28, Beijing time, global financial markets experienced a thrilling night. The three major U.S. stock indices plummeted collectively, with the Dow Jones Industrial Average crashing nearly 800 points, officially entering a technical correction zone; international oil prices surged sharply, with U.S. oil breaking the $100 per barrel mark; meanwhile, Iran issued a stern warning of retaliation, and the situation in the Middle East remained tense. A market storm triggered by geopolitical conflict is rapidly sweeping across every corner of the globe, affecting countless investors’ nerves.

01

U.S. stocks collapse across the board: technology, finance, and Chinese concept stocks plunge together

On Friday evening, U.S. stocks opened under pressure, with the three major indices opening lower and trending downward throughout the day, showing no significant rebound momentum. By the close, the Dow Jones Industrial Average fell 793.47 points, a decline of 1.73%, closing at 45166.64 points; the S&P 500 index dropped 108.31 points, a decrease of 1.67%, closing at 6368.85 points; the Nasdaq Composite Index plunged 459.72 points, a decline of 2.15%, closing at 20948.36 points.

This was not a mere coincidence of a single-day fluctuation in the U.S. stock market but a concentrated outbreak of panic in the market. Data shows that the Dow Jones index has fallen more than 10% from its recent peak on February 10, officially confirming it has entered a technical correction zone; the Nasdaq has also fallen more than 2% for two consecutive trading days, with all three major indices recording five consecutive weekly declines, spreading pessimism in the market.

The core trigger of this U.S. stock market crash is the chain reaction caused by the uncontrollable situation in the Middle East. Large tech stocks, which are core weights in the market, became the hardest hit. Facebook and Amazon saw declines approaching 4%, while major tech giants like Nvidia, Tesla, Microsoft, and Google all fell more than 2%, with the tech sector, which had been leading the charge, experiencing a severe setback.

Chip stocks also fell in tandem, with the Philadelphia Semiconductor Index down 1.69%, ARM down nearly 7%, GlobalFoundries and Microchip Technology down over 3%, and well-known chip companies like Marvell Technology and Broadcom also seeing declines exceeding 2%. The financial sector was not spared either, with bank stocks all in the red; Citigroup fell more than 4%, JPMorgan Chase over 3%, and Morgan Stanley, Goldman Sachs, and Bank of America all dropping more than 2%.

Chinese concept stocks also could not escape unscathed, with the Nasdaq Golden Dragon China Index down 1.90%. In terms of individual stocks, WeRide fell nearly 9%, Pony.ai dropped nearly 6%, Kingsoft Cloud and Hesai Technology fell over 5%, NIO dropped over 4%, Xpeng Motors fell over 3%, and commonly seen Chinese concept stocks like Alibaba and Tiger Brokers all saw declines exceeding 2%, significantly impacting investor confidence.

02

Oil prices soar above $100: Strait of Hormuz blockade, global energy crisis

In stark contrast to the plummeting U.S. stocks, international oil prices experienced a crazy surge, becoming the evening’s most dazzling “alternative star.” U.S. oil’s main contract closed up 7.09%, at $101.18 per barrel, breaking the $100 barrier for the first time since 2022; Brent crude’s main contract rose 4.74%, closing at $106.72 per barrel, reaching a recent high.

The direct catalyst for the surge in oil prices was the obstruction of passage through the Strait of Hormuz. As the “throat” of global oil transportation, this strait handles 20%-30% of the world’s maritime oil trade daily, and its passage conditions directly determine the global crude oil supply pattern. On March 27 local time, the Iranian Islamic Revolutionary Guard Corps announced that the Strait of Hormuz was closed, and any attempts to force passage through the strait would be met with severe retaliation.

Currently, the number of vessels passing through the Strait of Hormuz is only 6% of the historical average, equivalent to a “de facto blockade.” As a result, core OPEC oil-producing countries like Kuwait, Iraq, and the UAE have been forced to collectively reduce production, with the output from Iraq’s southern core oil fields plummeting by 70%, from 4.3 million barrels per day down to 1.3 million barrels per day, further exacerbating the global crude oil supply gap.

Data from the International Energy Agency (IEA) indicates that the conflict in the Middle East has caused the most severe oil supply disruption in history, with oil production in Gulf countries decreasing by at least 10 million barrels per day, and global oil supply expected to drop by 8 million barrels per day in March. Market analysis points out that even if some oil-producing countries reroute through alternative pipelines, the available export capacity is only 3.7 to 5.7 million barrels per day, far from filling the supply gap, meaning oil prices still face upward pressure in the short term.

03

Iran’s stern warning: escalation of retaliatory actions, nuclear facilities attacked causing panic

On March 27 local time, the Iranian Islamic Revolutionary Guard Corps issued a significant statement that pushed market panic to its peak. The statement explicitly stated that after multiple attacks by the U.S. and Israel on Iranian industrial facilities, Iran has decided to launch formal retaliatory actions and sternly warned all industrial enterprises and personnel in the Middle East associated with the U.S. and Israel to leave their workplaces immediately to avoid endangering their lives; it also called on residents within one kilometer of relevant facilities to temporarily evacuate their homes during Iran’s retaliatory actions.

Even more concerning is that Iran has clearly listed six steel mills in Israel and relevant industrial facilities in five regional countries as new targets for retaliatory strikes. According to insiders, Iran’s response actions “are not limited to the steel industry and may take broader and stronger measures,” with the possibility of further expanding the scope of the attacks not ruled out.

On the same day, Iranian authorities confirmed that the heavy water nuclear facility in Yazd province had been attacked by a joint U.S.-Israeli strike. This facility houses a heavy water reactor, an important component of Iran’s nuclear industry. The Iranian Atomic Energy Organization subsequently announced that after a thorough investigation, it confirmed that the attack did not cause any casualties and that, as necessary safety precautions had been taken in advance, there is currently no risk of nuclear contamination to surrounding areas; however, this incident undoubtedly intensified market concerns about the spread of a nuclear crisis.

Iranian senior security officials simultaneously issued a stern warning that if the U.S. launches ground actions in the Middle East, Iran will take reciprocal measures; any military action by the enemy in the Strait of Hormuz could lead to the strait being completely closed indefinitely. Additionally, the Yemeni Houthi forces also publicly stated that if the situation in Iran continues to escalate, they will take actions to support Iran, and the Iranian military has threatened to open a new front in the Bab el-Mandeb Strait, increasing the risk of further escalation.

04

The specter of inflation returns: Fed’s rate cut expectations shattered, recession risks rise

The crazy surge in oil prices has directly ignited market fears of a rebound in inflation. A survey released by the University of Michigan on March 27 indicated that due to rising fuel prices and severe volatility in financial markets, the U.S. consumer confidence index dropped sharply by 6% in March, reaching its lowest level since December 2025, with consumer concerns about the economic outlook significantly increasing.

Survey details show that compared to February data, consumers’ expectations for fuel prices in the coming year skyrocketed by about five times, reaching the highest level since June 2022; whereas expectations for personal financial situations in the coming year fell by 10%, with 47% of consumers explicitly stating that rising prices have placed a heavy burden on their personal finances, significantly increasing pressure on daily consumption.

High oil prices are pushing up inflation expectations, directly impacting the direction of the Fed’s monetary policy. Previously, the market generally expected the Fed to begin a rate cut cycle this year to alleviate the pressures of economic recovery, but now, with inflation risks rising, investors broadly believe that the Fed will be forced to delay rate cuts and may even reconsider raising rates. Bond yields are rising in tandem, further suppressing growth stock valuations, creating a vicious cycle of “oil prices rise - inflation rises - interest rates rise - stock market falls.”

Wall Street institutions are lowering global economic forecasts. Gina Martin Adams, chief market strategist at HB Wealth Management, stated that hopes for a quick resolution to the war are fading, and the stock market is beginning to show signs of fatigue. Brian Mulberry, chief market strategist at Zacks Investment Management, bluntly stated that the market is starting to reassess the situation, with the worst-case scenario being that oil prices remain above $100 by July, which would severely hamper the global economic recovery pace.

05

Global markets under pressure: risk aversion sentiments rise, risk assets sold off

The deterioration of the situation in the Middle East, soaring oil prices, rising inflation, and concerns over a shift in Fed policy have combined multiple negative factors, leading to a sharp rise in global risk aversion sentiment and widespread pressure on various risk assets. Aside from U.S. stocks, major European and Asia-Pacific stock markets have all experienced varying degrees of decline, with global stock markets overall entering an adjustment phase.

At the same time, traditional safe-haven assets like gold and the U.S. dollar are being sought after by the market, with prices rising significantly; the commodity market is experiencing increased volatility, with not only crude oil but also natural gas and prices of non-ferrous metals showing significant fluctuations, significantly increasing market uncertainty.

Market analysis points out that the global economy is already in a stage of weak recovery, with high inflation, high interest rates, and trade frictions not effectively resolved. The outbreak of conflict in the Middle East is undoubtedly “adding fuel to the fire.” If the situation continues to escalate and the blockade of the Strait of Hormuz cannot be lifted, oil prices will continue to remain high, global inflation pressures will further increase, and the risk of economic recession will significantly rise, leading to further turmoil in financial markets.

From the current situation, there are no signs of easing in the conflict between Iran and the U.S.-Israel; both sides maintain a hardline stance, and the blockade of the Strait of Hormuz is unlikely to be lifted in the short term. For the global market, this storm triggered by geopolitical conflict is far from over, and investors need to closely monitor the situation’s progress,做好风险防范, and remain vigilant against further market fluctuations.

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