Global markets are on the rise once more, as the prospect of ECB and Fed easing continue to boost stocks. Meanwhile, gold and crude have surged at the prospect of a further breakdown in relations between the US and Iran.
- Stocks push higher at prospect of new period of monetary easing
- BoE fail to follow the lead, with growth fears failing incite dovish stance
- Oil and Gold spike higher in response to Iran attack on US drone
Stocks are back in the green this afternoon, with the early morning pause for European markets proving fleeting. Despite a somewhat downbeat BoE meeting, the wider trend towards another round of monetary easing is boosting market sentiment. If Trump’s tweets have been anything to go by, he sees this as yet another currency war in the making. However, despite expectations of lower growth and inflation today’s BoE meeting did little to boost the prospect of a similar rate cut in the UK. With persistent wage growth, there is a fear that we will see inflation push sharply higher amid a devalued pound. However, to a large extent the dovishness seen throughout the ECB and Fed could negate the
need for action at the BoE, with weaker euro and dollar driving up the pound to lower inflation expectations.
Oil prices have spiked higher in the wake of an Iranian attack on a US drone overnight, as the Straits of Hormuz once again plays centre stage for energy markets. Trump has called Iranian action s ‘very big mistake’, indicating the potential for substantial repercussions in the near future. Coming in the week Iran announced their plan to breach the enriched uranium limit before the end of the month, markets are waking up to the fact that the nuclear pact appears to be out the window. Following a period of relative stability, we are seeing a ramp up in physical conflict and nuclear proliferation which gives traders every reason to buy both crude and gold. Gold has been one of the biggest outperformers in the wake of yesterday’s Fed meeting, with the spot price hitting a five-year high as traders shift towards havens in anticipation of another bout of monetary easing. The prospect of a weaker dollar coupled with rising tensions in the Middle East provides plenty reasoning behind the gains we have seen in gold.
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