Making sense of this crazy world
Important not to get ahead of ourselves
England got off to a flying start in the World Cup, which is great news because I didn’t want the doom and gloom that comes with the analysis of a below par performance. Imagine the furore if we had drawn 0-0 against Cape Verde! The trouble is, a bit like the markets, expectations are now getting ahead of themselves. A sense of proportion and perspective is required on both counts.
The oil price dropped, and markets rose, on the news that Trump has signed an interim accord – equivalent to a memorandum of understanding. Clearly, it doesn’t address the nuclear program, and many commentators in the US suggest that the government is now in a worse position, with a weaker hand, than the Obama agreement that Trump cancelled. However, all that aside, it does reopen the Strait of Hormuz, which will help ease concerns over a slowdown in global economic growth.
Despite extreme predictions and forecasts, the oil price proved remarkably resilient. We’ll explore how the oil market has shrugged off the Iranian crisis.
Kevin Warsh, Chair of the Federal Reserve, announced that US interest rates are on hold but hinted that there may be a rate hike at the end of the year. US equity indices fell on the announcement. US retail sales are proving resilient, despite rising prices at the pumps. Something that has certainly hurt the US consumer, as I realised when I was over there in April.
Meanwhile, markets have continued their momentum. Over the last 5 days, some of the major indices have performed as follows:
| FTSE 100 | 1.07% |
| FTSE 250 | 1.22% |
| Euro Stoxx 600 | 1.88% |
| Dow Jones | 3.04% |
| Nasdaq Composite | 2.81% |
| S&P 500 | 1.82% |
| MSCI Emerging Markets | 7.15% |
| MSCI Emerging markets | 7.25% |
All figures are before charges and are as of 11am on Thursday 18th June.
This week’s content:
- Trump signs and claims progress, but what’s the reality?
- How the oil market shrugged off the Iranian crisis
- Interest rates in the US and UK hold steady
- US shoppers step up spending
- AI and technology stocks aren’t in a bubble
- Conclusion
Trump signs and claims progress, but what’s the reality?
The US and Iran have electronically signed an interim deal that extends the ceasefire and offers concessions to Iran. “Frozen Iranian funds will be released and sanctions lifted as soon as they behave”, said Trump.
Details of the interim deal released by the Trump administration indicated the US would “terminate all types of sanctions” on Iran. As previously reported by the FT, the US will grant Iran a waiver to export oil during a 60-day extension of an April 8 ceasefire. Iran will gradually reopen the Strait, and the US will lift its blockade of Iranian ports under the terms of the deal. A final settlement would depend on the US and Iran agreeing a nuclear deal. The unfreezing of assets would depend on progress towards a final settlement. The 60-day period could be extended.
Continues…
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