Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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The United States and Iran have agreed to a two-week ceasefire, suspending a planned bombing campaign that would have targeted large swathes of Iranian infrastructure. Financial markets have been quick to react this morning, with crude oil prices plummeting below $100 per barrel and Asian stock markets undertaking a bold push higher. Brent Crude is now hovering around $95 per barrel, while WTI, in a rare inversion, is currently trading at a slight premium at $96 per barrel. Oil markets are currently in a situation known as backwardation, meaning shorter-dated contracts are more expensive than longer-dated deliveries because markets expect the ongoing conflict to be resolved by the summer months. Coupled with different expiration dates for the two benchmarks, with WTI currently trading the May contract and Brent having already rolled over to the June contract, the reason for the premium in American oil becomes clear.
Markets are predictably bullish going into today’s session, with the Nikkei 225 quickly rising 5% and the Korean Kospi index surging over 6% upon hearing the news. Futures for the Dow Jones and S&P 500 are 2% in the green, while Nasdaq futures are currently up over 3%. Precious metals continued their ascent, tipping gold above $ 4,800 per ounce and lifting silver 5% higher to $77 per ounce. Currencies are reacting equally strongly, with foreign exchange flows now fleeing the safety of the US dollar. The Euro came within a hair’s breadth of $1.17 earlier today, while the Pound was able to reclaim $1.34. The yen and Korean won both leapt higher, the latter gaining almost 2% against the greenback, erasing four weeks of losses in the process. Even cryptocurrencies are finally showing a degree of interest in world affairs, with Bitcoin rising up to $72,000 per coin and reaching a three-week high.
While the conflict in Iran will undoubtedly continue to dominate the news cycle, traders would do well to keep an eye on a few key economic releases in the latter half of the week. Given the market closures around the Easter holiday, last Friday’s NFP release was understandably muted, despite surprisingly upbeat figures. US payrolls increased by 178 thousand in March, almost triple the expected figure of 60 thousand, while unemployment ticked down to 4.3% from 4.4% the month prior. The Fed will now have to grapple with the other side of the coin on Thursday with the release of the PCE price index, which is expected to show inflation holding steady at 2.8% YoY in February. The release precedes CPI figures on Friday, which are predicted to show a sharp uptick to 3.3% in March. The FOMC minutes from the latest meeting are scheduled for release later today, but so far FedWatch is not showing any signs of anything other than a rate hold at the end of the month.
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