- Despite Israel’s agreement to cease fire with Iran a few minutes after theas investors believe the risk of wider conflict is small, global markets gather and oil prices fall. The symbolic nature of Iran’s revenge and the fear of reducing fear of oil supply disruptions have shifted the focus to fundamentals and possible future U.S. interest rates.
At 7.10 am London time, Israel officially agreed to the ceasefire agreement announced by President Trump last night. But just 81 minutes later, Iran launched new missiles to northern Israel. The Israeli Defense Minister vowed that “Tehran will be shaken” and ordered the Israel Defense Force to respond strongly. Iran denies that it has updated hostilities.
However, the market is unpopular. The price of Brent crude oil has hardly made news this morning, and now it is at $68 a barrel, lower than when the U.S. air strikes at Iran’s nuclear facility. S&P Futures rose nearly 1% this morning.
The major Asian indexes rose this morning, with the Stoxx Europe 600 growing 1.3% in early trading. Even the VIX fear index has already involved conflicts – down 13% this morning.
Why did investors not care about what a few days ago were widely considered a potential start to World War III?
Because everyone knows that day since Iran threatened to close the Straits of Hormus This situation is extremely unlikely to happen Iran’s choice to attack Israel or anyone else is very slim.
Its Kabuki-Show attack on Qatar’s U.S. Air Base is an example: Iran reminds the White House that the attack is coming in, the barrage is small, and Qatar is actually an ally of Iran.
The euro is weakened based on the notion that Europe will suffer losses from any oil shortage in the Middle East. But, according to Antonio Ruggiero, it seems now that it has stood out, with the EU currency bounced.
“In that way, the geopolitical drag on the euro seems to have evaporated. The euro/dollar decisively surpassed the $1.1620 area when writing, and the rally that began yesterday began as the market swings and conflict issues. Tensions will escalate further due to tensions. It – there are enough early warning warnings,” he told the client.
In other words, this war is primarily about showing that investors are returning to fundamentals rather than politics.
On this topic, U.S. Federal Reserve Chairman Jerome Powell will testify to Congress today – equity holders will closely interpret clues about when he will lower interest rates (cheaper money is usually a headwind for stocks).
“The U.S. Federal Reserve members should support financial markets, with some medium-priced comments,” UBS analyst Paul Donovan told clients this morning. “The advice is that interest rates can be lowered in the summer and may fall when inflation rises.”
Here is a snapshot of the action before the opening bell of New York:
- Standard & Poor’s Futures Despite reports that the ceasefire agreement between Iran and Israel appeared to be hit by missiles almost immediately last night, it rose 0.91% this morning.
- this S&P 500 Index Closed 0.96% yesterday.
- Brent crude oil Rejected $68 a barrel this morning.
- Stoxx Europe 600 It increased by 1.3% in early trading.
- South Korea kospi This morning it grew by 2.96%.
- From Hong Kong Hang Forest Increased by 2%.
- China’s CSI 300 Increased 1.2%.
- Japanese Nikkei 225 Increased 1.14%.
- this vix The fear index retreats by more than 10%.
