S&P futures declined significantly on Wednesday following U.S. President Donald Trump’s declaration at the NATO summit in Turkey that the ceasefire with Iran is “over.” This announcement coincided with a resurgence of hostilities in the Middle East, which resulted in a spike in oil prices. Futures on the Dow Jones Industrial Average declined by 705 points, representing a decrease of 1.3%, in the wake of Trump’s remarks in Ankara. Futures associated with the S&P 500 experienced a decline of 1%, while Nasdaq 100 futures also saw a decrease. International Brent crude futures experienced an increase of nearly 6%, reaching a price of $78.54 per barrel. West Texas Intermediate futures surged 6% to a trading level of $74.75. European stock markets experienced a significant decline, with the Stoxx 600 regional benchmark decreasing by 1.8%. All major regional exchanges and sectors, with the exception of oil and gas, moved into negative territory.

The U.S. initiated a “series of powerful strikes” against Iran on Tuesday evening, responding to assaults on three commercial vessels navigating the Strait of Hormuz, according to U.S. Central Command. Earlier, the Treasury Department revoked a licence that allowed Iran to sell its oil globally in response to the attacks in the Hormuz Strait. In a statement on Wednesday, Iran’s foreign ministry characterised the strikes as a “gross violation of the Memorandum of Understanding” that was established between Washington and Iran last month to conclude their conflict. “The powerful armed forces of the Islamic Republic of Iran, as they have repeatedly shown, will not hesitate to defend Iran’s territorial integrity, national sovereignty, and national security against American military aggression,” the ministry said.

During a conference at the NATO summit in Ankara, Turkey, on Wednesday, the Secretary General of the military alliance, Mark Rutte, stated that the strikes conducted by America were “absolutely necessary.” And “When you have a ceasefire and Iran is basically violating the ceasefire — we see what happened yesterday with ships being attacked — I think it is totally crucial that the U.S. forcefully reacts,” he said. “Renewed tensions in the Middle East have interrupted what had become an increasingly complacent market narrative, prompting investors to reassess geopolitical risks after several weeks of pricing in a smooth path toward de-escalation,” Daniela Hathorn said in a note on Wednesday morning. “The latest attacks have reminded investors that while a ceasefire remains in place, a lasting agreement between the U.S. and Iran is far from guaranteed. Markets had become comfortable with the idea that the conflict would gradually fade into the background but recent developments suggest that assumption may have been premature.”

Investors will also focus on the minutes from the Federal Open Market Committee’s June meeting, scheduled for release at 2 p.m. on Wednesday. The release is anticipated to offer greater clarity regarding Federal Reserve Chairman Kevin Warsh’s inaugural policy meeting, during which officials opted to maintain interest rates at their current levels while indicating that further rate increases may be necessary should inflationary pressures continue to be a concern. “The FOMC minutes will be [a] wildcard simply because Warsh was so opaque at the most recent press conference,” Adam Crisafulli said in a note. “Normally, [Jerome] Powell provided fairly comprehensive accounting of the meeting discussion, but that didn’t happen with Warsh, so the minutes, which are likely to be hawkish in tone, could contain some surprises.”