Recent trading sessions have been nothing short of wild roller coaster rides.
Stock Markets reached new cycle lows on Friday and in the overnight Futures session, driven by fears of an escalation as the rhetoric seemed to intensify.
But that wasn’t without counting another Trump yo-yo, as he surprised Markets with the announcement of potential peace talks restarting, as the fourth week of the US-Iran conflict officially begins.
On the announcement, a frantic wave of volatility unwinding shook Markets all over:
Gold tumbled to $4,100, only to be saved by its 200-Day Moving Average (closing around $4,400). Stock Markets across the world exploded by 3% from their relative lows, Yields significantly eased, and, most importantly, Oil fell further.
WTI broke the $90 psychological bar, and more strikingly, Brent fell back below $100 for the first time since March 13 – A significant easing in pricing compared to the slow grind higher that had been seen since.
For now, this is only the beginning of some form of de-escalation, but it’s not like peace is a done deal.
With Iran denying any potential talks, optimism quickly faded. However, there are still signs that talks could be coming soon, with Iranian Parliament Speaker Qalibaf travelling to Pakistan with US and Israeli approval.
With about 4,500 US Marine troops currently traveling towards the Middle East, this could just be a distraction tactic, as mentioned here. Still, the reality is that we are now entering the fourth week, and both Israel and the US mentioned a 4 to 5-week operation.
That would be a massive repricing for a deal, as Markets were getting increasingly pessimistic about the length of the conflict – The only truth is what Markets are saying:
Keep a close eye on WTI, Brent, the US Dollar, and Stock Markets, which are losing some of their session strengths as the session concludes.
