The ongoing conflict in Iran is negatively impacting global markets and the international community. The tragic loss of life and damage to infrastructure are deeply concerning, and if the situation persists for several more weeks, it could have severe repercussions for the global economy. Oil prices continue to rise, driving up energy costs, leading to higher yields, and prompting a risk-off sentiment.
The US Dollar remains strong amidst the ongoing conflict in Iran, a trend likely to persist until tensions ease. Last week, the DXY index increased by 0.7%, closing at 100.193.
Meanwhile, the Euro fluctuated amid inconsistent economic data from the Eurozone. The British Pound also demonstrated uncertainty, with the UK CPI aligning at 3% YoY, still significantly above the Bank of England’s target.
Commodity currencies have reversed the previous week’s gains, as their performance appears more closely linked to risk sentiment than to commodity prices. The Canadian and New Zealand Dollars fell by about 1.5%, while the Australian and Norwegian Krone dropped 2% against the US Dollar. In other currency movements, the Japanese Yen decreased by 0.7%, while the Swiss Franc fell by more than 1%.
Crude Oil remains in contango, with markets anticipating high short-term prices but a return to average levels later. Last week, WTI surged by 3%, closing at $101.17, comfortably above the significant $100 psychological mark.
Precious metals had a rough trading week, yet ended strongly on Friday despite the equity market downturn. Could this indicate a market bottom, with them regaining their status as a safe haven? Only time will tell. Last week, Gold ended nearly flat at $4,494, while Silver rose by 2.7% to finish at $69.72.
Bonds declined further last week, but the downward momentum appears to be losing strength. With mounting debt levels and deficits, governments and central banks cannot sustain high yields for long. The markets are currently pricing in rate hikes, with no signs of easing, which poses risks. The 10-year US Treasury yield increased by 5 basis points to close at 4.43%, while the 10-year Bund dropped 0.5% to 124.427 points.
Equities continue to trade heavily, and as long as the conflict in Iran persists, there is little optimism for bulls. The S&P 500 index fell 2.7% to 6,350 points last week, while the DAX performed better with only a 0.3% decrease to 22,301.
Cryptocurrencies have regained their correlation with equities, experiencing a negative week. Recently, cryptos have been unpredictable, lacking clear direction or correlation. At the time of writing, Bitcoin is down 3% at $66,500, and Ethereum has fallen 5% to $1,990.
The upcoming week is shorter due to Good Friday, and the focus will remain on the ongoing conflict in Iran. The question is whether the US and Israel will find a resolution with Iran to de-escalate the situation and restore some normalcy. There is certainly hope for such an outcome. In terms of data, more PMIs and US Nonfarm Payrolls are due on Friday, but the markets are unlikely to place significant emphasis on these figures.
Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument. All market prices, data, and other information are not warranted as complete or accurate and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Coeus Capital. Coeus Capital does not assume any liability whatsoever for the content of this email or make any representations or warranties as to the accuracy and completeness of any information contained in this newsletter.
