LIVE MARKETS-A bit of calm after the storm… or before the next one?
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A BIT OF CALM AFTER THE STORM… OR BEFORE THE NEXT ONE?
Markets are slightly more calm than last week despite the dizzying pace of developments in the Middle East, with oil prices rising but still around $105, and the STOXX 600 falling but trading above recent lows.
According to Thierry Wizman, global forex and rates strategist at Macquarie Group, the war may now enter its third phase - of "talk and fight", after talk only, or fight only.
“That may better protect market sentiment than war alone,” Wizman says.
“But it also sets us up for a greater decline if it doesn't work to provide stability and security,” he adds.
The Iranian foreign minister said Tehran was reviewing a U.S. proposal but had no intention of holding talks to wind down the war.
“Markets’ relative calm may reflect an assumption that Iran will keep squeezing traffic through Hormuz without fully shutting it, while the U.S. tolerates some passage because President Trump wants to avoid a prolonged energy shock,” says Felix Vezina-Poirier, macro strategist at BCA Research.
Bund yields have risen again on Thursday, heading back towards their recent highs above 3% after comments from ECB President Christine Lagarde.
“Risk sentiment in other segments (other than bonds) seems to have grown comfortably numb with respect to the Middle East or at least seem to react asymmetrically,” said Erik Liem, rate strategist at Commerzbank.
(Stefano Rebaudo)
EARLIER ON LIVE MARKETS:
GOLD SELLOFF CREATES "REASONABLE" ENTRY POINT - BARCLAYS CLICK HERE
STOXX 600 DROPS 1%, OIL RISES AS MARKETS WEIGH UP MIDDLE EAST UPDATES CLICK HERE
EUROPE BEFORE THE BELL: OIL UP, STOCK FUTURES DOWN CLICK HERE
HOPE AND HORMUZ CLICK HERE
