After the record highs in Wall Street yesterday, the mood music is switching around as we get into the new day. With markets turning their attention to Trump’s visit to China, the war in the Middle East continues to rage on. While there might have been some hopeful optimism about maybe expecting Trump to push Beijing to take action on Iran, that doesn’t seem to be coming as we draw closer to the weekend.
And that is arguably why we’re starting to see markets get caught by another risk-off wave as we approach the final stretch of the week.
US-Iran talks remain stalled and all China are saying is that “yes, there is no point in continuing the conflict” and that “the Strait of Hormuz must remain open for the good of everyone”.
All this while traffic along the strait itself remains at a standstill, with only a minimal amount of bulk cargo and small tankers passing through (less than 10 vessels per day). With no oil tankers still able to transit, the status quo remains.
Oil prices are keeping higher with WTI crude (June contract) up 1.5% to $102.65 currently. Meanwhile, Brent crude is up 1.3% to $107.05 on the day.
At the same time, we’re seeing the dollar move up across the board alongside bond yields too. EUR/USD is down another 0.2% today to 1.1643 and AUD/USD down 0.7% to 0.7167 on the day. Meanwhile, 10-year Treasury yields are up by nearly 7 bps to 4.53% and 30-year yields in the US are up over 5 bps to 5.06%.
In the equities space, we’re seeing US futures take a knock with S&P 500 futures now down 0.5% and Nasdaq futures down 0.8%
