Geopolitics take center stage

Important news this week

• Mon, 16:00 CET US ISM manufacturing pmi.
• Tue, 13:30 CET UK Annual budget release.
• Wed, 14:15 CET US ADP employment change.
• Thu, 14:30 CET US Unemployment claims.
• Fri, 14:30 CET US NFP employment report.

Geopolitics

With the attacks on Iran by Israel and the United States, geopolitical tensions have increased again. Claims from Donald Trump that Iran is close to having nuclear bombs have been known since the first war against Iraq and seem obsolete, particularly given that talks with Iran in Vienna had recently been resumed. Iranian retaliation may now continue, and overall uncertainty is rising. The closure of the Strait of Hormuz is another factor adding to uncertainty in the global economy. Not only the high volumes of oil transported through that route, but particularly fertilizer products, could harm the economy in a few weeks if supply is disrupted.

Market talk

Some strength in the dollar is currently helping only marginally to keep oil and gold prices at bay. In general, both assets should be expected to rise further, although parts of the current situation have already been priced in. Stocks may weaken further as uncertainty grows. A correction in equities has been forming for weeks and may now find the fundamental reasons to materialize. An escalation of the conflict would certainly increase profit-taking. Given that China is particularly dependent on oil imports, Chinese stocks may also be vulnerable to further losses.

Tendencies in the markets

• Equities weak, USD stronger, crypto weaker, oil sideways, Silver positive, Gold positive.