U.S. stocks closed lower on Thursday, with the Nasdaq falling 1%, the Dow dropping 1.32%, and the S&P 500 slipping 0.87%. Shortly after the market opened, Walmart's share price plunged over 9%, marking its steepest single-day decline since July 2022. The "Magnificent Seven" tech stocks all declined, while storage and optical communications sectors gained strength. Analysts suggest that the U.S. Treasury's announcement of a long-term bond buyback program briefly lifted market sentiment, but the effect quickly faded. Rising international oil prices have also brought U.S. inflation risks back into investors' focus, intensifying market anxiety.
The 30-year U.S. Treasury yield briefly erased gains made since the Treasury's buyback announcement, with the yield temporarily climbing back to 5.26% during the session. International oil prices rose to their highest level in nearly a month. WTI crude for September delivery climbed 2.33% to $87.83 per barrel, while Brent crude for October delivery rose 2.36% to $93.78 per barrel. Gold prices edged lower, while silver gained, with spot gold down 0.08% at $4,519.14 per ounce and spot silver up 1.63% at $68.07 per ounce.
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On the 20th, U.S. Treasury Secretary Bessent announced plans to impose "unprecedented economic isolation" on Iran, with a press conference scheduled for the 24th to detail the specific actions. This follows a prior threat from Trump to unleash "the most devastating economic action against a country in history." Iran responded swiftly, dismissing the remarks as futile, stating that sustained economic sanctions and pressure will not achieve U.S. goals and will only deepen confrontation. Tehran warned that any miscalculation or erroneous action by Washington could lead to severe consequences. Whether Washington's economic sanction strategy against Iran will succeed remains uncertain, while the combined burden of geopolitical tensions and social costs continues to strain U.S. fiscal resources.
In a separate development, the foreign ministers of the U.K., France, Germany, Italy, the Netherlands, Norway, and Canada issued a joint statement on the 20th condemning Israel's "E1" settlement construction plan and urging the Israeli government to immediately withdraw it. The seven nations declared the tender for housing units in the "E1" area "unacceptable," arguing that the project would split the West Bank, undermine the contiguity of Palestinian territory, and jeopardize the two-state solution. The statement emphasized that international law clearly deems Israeli settlements in the West Bank illegal, a position supported by the U.N. Security Council.
The statement also noted that the current volatility in the West Bank, unprecedented levels of settler violence against civilians, and severe restrictions on the Palestinian economy make Israel's advancement of the settlement plan particularly concerning. The seven nations urged Israel to halt all settlement expansion in the West Bank and called on businesses to refrain from participating in related project tenders, warning of potential legal and reputational risks. Israel's government issued a tender for 1,234 housing units in the "E1" area on the 18th, following Finance Minister Smotrich's August 2025 announcement of plans to approve 3,401 units there, which he described as a move to "bury the idea of a Palestinian state." Israel occupied East Jerusalem and parts of the West Bank during the 1967 Six-Day War and has since built settlements, imposing long-standing restrictions on Palestinian movement and access, which have drawn strong opposition from Palestinians.
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According to recent reports, sea surface temperatures in the central and eastern equatorial Pacific are rising, with expectations that a super El Nino event will peak around November to December. This event could potentially become the strongest on record, characterized by rapid development, high intensity, and significant climate impacts. Wang Jun, vice president and chief expert at Green Dahuang Futures, told reporters that this super El Nino will most notably affect three major commodities—palm oil, natural rubber, and white sugar—whose main producing regions are highly concentrated in Southeast Asia's drought core areas. Cotton will also experience phased disruptions, primarily due to weakened monsoon impacts on India's rain-fed planting zones, while precipitation in the U.S. and China's Xinjiang region could also affect cotton quality.
Wang Jun analyzed that the impact of an El Nino event on domestic agricultural markets is transmitted through three main pathways. First, El Nino creates a climate pattern of "flooding in the south and drought in the north," where northern corn and wheat producing areas face threats of high temperatures and drought, while southern rice regions are prone to flooding and pest risks. Vegetables and livestock products are also directly disturbed by extreme weather. Second, China relies heavily on imports for soybeans, and its dependence on foreign sources for palm oil and natural rubber is also high. If major overseas producing regions experience production declines, import costs will rise directly, pushing up domestic soybean meal, feed, and related oil prices. Third, rising upstream raw grain and feed costs increase feed expenses, which account for 60% to 70% of breeding costs, squeezing profits for pig and poultry farmers, and gradually passing through to cooking oil, meat, eggs, dairy, and downstream food processing, ultimately affecting consumer prices. Additionally, transportation disruptions and rising storage costs caused by extreme weather could further amplify price fluctuations.
Whether the weather disruptions from this El Nino event will drive agricultural prices into a sustained trend remains a key question. Sun Fukun, vice president of Huayuan Futures, believes three conditions must be met: disaster weather in major producing areas must translate into substantial production declines, the impact must pass through to inventory and trade channels, and price movements must materialize with a lag. Sun Fukun noted that historical reviews show most agricultural prices do not rise immediately at the onset of the event. Instead, rallies often begin after the El Nino peak, during the production decline realization period, or three to six months after the event concludes. Price highs for commodities like palm oil and natural rubber can even lag by four to five quarters. The market is currently in a critical window transitioning from "expectation speculation" to "production decline realization," with long-term supply contraction and demand growth from sectors like biodiesel creating a resonance that could push agricultural price centers higher.
Looking ahead, Wang Jun believes agricultural prices will generally exhibit a pattern of "high-level volatility in the short term, with a stronger trend in the medium to long term." Although global oilseed inventories remain at high levels, the market has already priced in production decline expectations, making overseas vegetable oil prices highly sensitive to changes in macro liquidity. As the El Nino event peaks at year-end, the production decline effect for palm oil will gradually emerge. Combined with Indonesia's B50 biodiesel policy tightening supply expectations, global oilseed inventories are expected to reach an inflection point in the fourth quarter of 2026, with oilseed price centers gradually trending upward.
Investors are advised to monitor these developments closely, as the interplay of geopolitical tensions, climate risks, and supply chain dynamics could create significant opportunities and challenges in the agricultural and broader commodity markets.