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In response to a possible resolution of the U.S.-Iran conflict, even though it could be temporary, we can observe notable changes in the markets.
Equity futures in the U.S. along with shares in European and Asian markets have begun to rise again. This is the desired response as some calm develops with the ongoing tensions between Iran and the U.S.
President Donald Trump, in a speech delivered yesterday, suggested that the U.S. will be tuning down the conflict. Regardless of the somewhat repeated attacks at the U.S. embassy in Baghdad, the Trump administration seems to prefer calm to chaos.
Conflict began days ago when the U.S. admitted killing top Iranian General Qassem Soleimani in an airstrike in Baghdad. Since then, Iran has fired a few counter-attacks, sparking rumors of an escalation to a world war.
Now tensions seem to be reducing, equity futures and shares in the U.S. and other regions have the chance to rear their heads again.
U.S. Futures Rise
In response to a possible resolution, however temporary, there have been notable changes. For example, futures contracts on the S&P 500 gained a little over 0.4%. A similar gain was also seen on the Nasdaq 100 Index which shot up by 0.5%.
“The backdrop remains benign for equities. Low rates, low inflation and low growth. A mild Goldilocks in many ways.”
Other Recorded Movements
Futures on the Nasdaq 100 Index increased by 0.5% with a 0.4% jump also seen in the Stoxx Europe 600 Index.
For currencies, there were gains as well as losses. For example, the Japanese yen shed 0.3% of its weight, dropping to 109.45 per dollar. Another loss was the British pound which fell to $1.3033, a 0.5% plunge.
For gains, the Indian rupee jumped by 0.7% to hit 71.215 per dollar. Bloomberg’s Dollar Spot Index was the lowest mover, pulling in a 0.1% increase.
In between the climbers and the plungers was the Euro, which didn’t really move at $1.111.
Bonds and Commodities
In the same period, interesting movements were also recorded for both bonds and commodities. Prices for spot gold had initially reached $1,603, breaking a record about 6 years old. Gold futures also climbed 2% to $1,605. However, it eventually fell to $1,552.9. Iron ore also fell to $91.97 per metric ton, losing 0.2% as well. On the other hand, the West Texas Intermediate crude climbed 0.1% and hit $59.64 per barrel. Corn also followed suit climbing 0.5% to a bushel price of $3.86.
For bonds, movements were not exactly great. 10-year Treasuries yield hit 1.87% after losing one basis point. Two basis points were lost on Britain’s 10-year yield, as it hit 0.793%.
We’re less than 2 weeks into the new year 2020 and so much has happened. There has already been a lot of movement in the global markets with gains and losses. More movement is expected in the year and there is the chance U.S. futures would rise again.