Welcome to this week’s Market Update.
Uncertainty is the new certainty. In a seemingly endless barrage of world events, market movements stay muted until the outcome is realised. The US airstrikes in Iran has created tremors, but markets are bracing for worse.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1485 |
| gbp eur | 1.1689 |
| gbp usd | 1.3426 |
Rates correct as of 10:00am on 23rd June but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
US enters conflict and oil rises
US airstrikes on Iran have understandably had a market impact. Of course, there are ramifications that stretch far beyond markets, but oil saw major gains and US equity futures wavered as traders awaited what Tehran might do in response. USD exchange rate increased particularly with the Iraqi dinar. Generally though, participants have already been bracing for worsening conflict. The S&P 500 is only about 3% below its all-time high from February.
Threat of closure to the Strait of Hormuz
Further developments would occur if the conflict were to significantly impact the Strait of Hormuz, a key artery for crude and natural gas. Already 2 super-tankers did a U-turn (with one returning) after rising risks to shipping. Full closure for more than a few hours or days would be catastrophic, although most experts consider that unlikely. Such an event would strangle oil shipments and cause crude prices to surge – with JPMorgan & Co. analysts projecting increases of nearly 70% – driving worldwide inflation and severely hampering economic expansion.
Impact of tariffs on inflation now in play
US steel tariffs will apply to common household goods from Monday. Prices of washing machines, fridges and ovens could all increase for American consumers. Levies on steel and aluminium imports are currently 50% and are coming into force 3 weeks before the end of the 90 days pause on so called “reciprocal” tariffs. Trump is aiming to boost US domestic manufacturing around several critical industries.
Looking forward
A huge number of Central Banks are speaking this week.
- Monday – UK, EU + US all releasing Manufacturing, Services and Composite figures
- Tuesday – Canada CPI. Fed Chair Powell Testimony.
- Wednesday/Thursday – US consumer confidence, GDP and inflation data
- Thursday – EU consumer confidence
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- The changeable interest rate environment
- Tariff driven inflation and how it affects businesses
- The Middle East scenario
The contents of this article do not constitute financial advice and are provided for general information purposes only.
