Global Markets Turbulent Amid U.S.-Iran Tensions, Trump Tariffs, and Tech Stock Decline

Huo Xing Finance reports: On July 25, this week’s global markets revolved around four key themes—the escalation of U.S.-Iran tensions, successive U.S. tariff hikes, the collapse of the yen’s exchange rate, and concerns over AI-related capital expenditures in the tech sector—interweaving risk-off sentiment with policy disruptions. International oil prices emerged as the dominant trading theme: U.S. military strikes against Iran continued, while Houthi forces threatened shipping in the Red Sea, pushing Brent crude above $100 per barrel for the first time in two months, with both major oil benchmarks set to rise for a third consecutive week. The USD/JPY exchange rate climbed to 163.98, reaching its highest level since November 1986. In U.S. equities, the Dow Jones fell for a third straight week, while the S&P 500 and Nasdaq declined for a second consecutive week. Tesla plunged 14.5% on Thursday, closing the week down nearly 18%—its largest weekly drop since 2022—and the seven major tech giants collectively lost nearly $800 billion in market value in a single day. The U.S.-Iran conflict has entered a new phase, with both strategic straits under threat. The U.S. military has completed its 13th consecutive night of strikes against Iranian military targets and deployed B-1 bombers to enhance strike capabilities. Iran’s Revolutionary Guard Corps claimed attacks on U.S. facilities in Kuwait, Bahrain, Jordan, and Larak Island. Navigation through the Strait of Hormuz remains disrupted, while the Houthis announced a maritime blockade against Saudi Arabia and attacked two Saudi oil tankers, further spilling conflict risks into the Red Sea. Diplomatic efforts to de-escalate continue, but Iran has rejected a 10-day ceasefire proposal, with the U.S. asserting Iran lacks sincerity in negotiations. The U.S. imposed a concentrated wave of new tariffs within a week, affecting nearly 60 economies. The Trump administration took multiple actions this week: imposing a 50% tariff on approximately $20 billion worth of Canadian goods (effective August 19); revising aluminum import tariff policies to offer preferential rates in exchange for investment incentives; announcing that generic drug imports will remain duty-free for two years before gradually increasing tariffs to 100–200% starting in 2028; imposing a 25% tariff on most Brazilian goods; and launching Section 301 tariffs against 60 economies for allegedly failing to adequately prohibit products made with forced labor—replacing an expiring temporary global tariff regime that covered 99.4% of U.S. imports. The yen breached the 163 level, hitting its lowest level since 1986. Japan’s Ministry of Finance and Cabinet Office repeatedly signaled readiness to intervene in currency markets, but as of Friday, no actual intervention had occurred. The U.S. Treasury’s semiannual currency report concluded that the yen is significantly undervalued; Japan remains on the currency monitoring list but has not been designated a currency manipulator. Concerns over AI-related capital expenditures weighed heavily on tech stocks. Alphabet reported second-quarter revenue growth of 24% and cloud revenue growth of 82%, yet its stock plunged after raising its 2026 capital expenditure forecast to $195–205 billion and reporting negative free cash flow of $5.9 billion. Tesla’s revenue rose 26% year-over-year to $28.236 billion, but operating profit plummeted 57%, with margins shrinking to just 1.4%. Coupled with a 142% year-over-year surge in capital expenditures, its shares dropped nearly 14% on Thursday—the steepest decline among the seven tech giants. Meanwhile, OpenAI, AMD, SpaceX, and others continue to intensify their investments in computing power and chips.