Market Overview

Oil prices plummeted after President Trump canceled military strikes on Iranian oil sites. This price drop happened because removing the immediate fear of war reduced the extra cost—called risk premium (extra price for danger)—traders add during crises. Cheaper energy reduces inflation pressures, which helped boost stock markets globally. However, this relief might be temporary because Middle East shipping lanes remain blocked and hot weather is disrupting European power supply. Next, investors should watch Friday's US job report and actual ship traffic through the Strait of Hormuz to see if lower prices last.

The dollar hit its strongest level versus the yen since 1986, prompting the U.S. and Japan to jointly intervene—a rare move. Here's the mechanism: Instead of selling dollars (which could flood an already fragile Treasury bond market), America sold euros from its emergency fund, which weakened the euro and freed up resources to support the yen directly. The yen rebounded 3.5%. However, currency interventions alone rarely fix deep problems: the real issue is interest rate differences between countries, which keep pushing traders toward the dollar. Watch next: whether the Federal Reserve expands its lending tools to support foreign governments' currency needs, and whether Japan can narrow that underlying rate gap.

Major oil companies made record profits after Middle East turmoil cut global oil supplies by a fifth. President Trump publicly criticized them Monday, demanding they lower pump prices now near $4.10 per gallon. But the real problem—which Trump's pressure won't fix—is refining capacity, not crude. Wars and export bans have cut refining by 10%, creating physical shortages. Oil companies can't lower prices when they can't buy cheaper refined products to sell. Watch: whether Trump threatens taxes or antitrust action, whether refinery availability tightens further, and whether Asian buyers outbid Western markets for crude.