Oil prices surged while global stock markets took a hit on Wednesday as U.S. President Donald Trump cast doubt on the temporary peace agreement with Iran. The S&P 500 dropped 0.3% during the day, with the Dow Jones falling 1.1% after Trump’s announcement that the ceasefire was over. Despite an initial decline, the Nasdaq composite managed to rise 0.2% following Trump’s statement later in the day that the recent hostilities did not signal a return to full-scale war.

Canada’s primary index, the S&P/TSX, ended the day down approximately 1%. In the oil sector, the price of a barrel of Brent crude surged by 5.2% to $78.02 US, briefly surpassing $80 US. Although still below its peak during the conflict, this increase is concerning as oil prices had recently returned to pre-war levels.

There are fears that ongoing conflict could disrupt the flow of oil through the Strait of Hormuz, potentially leading to inflation and prompting central banks to raise interest rates. Higher rates can help control inflation but may also slow economic growth and negatively impact various investment sectors.

On Wall Street, companies heavily reliant on fuel experienced significant declines. American Airlines saw a 4% drop, while cruise operator Carnival fell by 3.9%. Housing industry stocks were also affected due to concerns about rising Treasury yields impacting mortgage rates.

While some AI stocks faced pressure in recent weeks, influential companies in the artificial intelligence sector stabilized, with Nvidia posting a 3.7% increase and driving gains in the S&P 500. In the bond market, Treasury yields rose in conjunction with oil prices.

Internationally, European markets suffered losses following Trump’s announcement, with Germany’s DAX and France’s CAC 40 both losing 2.2%. In Asia, South Korea’s Kospi experienced a 5.3% decline, while Hong Kong’s Hang Seng index defied the trend by rising 3%. Chinese AI startup Zhipu’s shares traded in Hong Kong surged by 13.4%, reaching a more than 1,300% increase since its debut.