LIVE MARKETS-Time to breathe?

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TIME TO BREATHE?

The Middle East ceasefire was met with a sigh of relief. But the "not so fast" comments quickly followed.

“Significant hurdles” remain before the ceasefire “can translate into a lasting end to the war,” Neil Shearing, group chief economist at Capital Economics said in a note on Wednesday.

For markets, the Strait of Hormuz remains the top issue, Shearing said, pointing to continued uncertainty about the passage of oil tankers.

And even if a deal is struck, the conflict de-esclates in the coming weeks, and energy flows through the Strait resume, there would be some consequences, he said.

For example, some regional countries could see sharp GDP contractions, inflation in major economies is still expected to rise further, and oil and natural gas prices will likely stay remain elevated compared to earlier this year.

Current central bank rate hike expectations however “may prove excessive.”

And elsewhere, “equity markets are likely to ebb and flow according to developments in the talks over the next couple of weeks.”

(Sophie Kiderlin)

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