Markets ready to take the risk on once again as Trump news fades
Iranian elections is something what matter the most for the Middle Eastern growth
Gold Off from its highs but not falling off the cliff
Market Risk Ease off
Trump’s recent let-the-chips-fall-where-they-may move, was the last straw for the US equity markets that were already in need for a healthy correction. Whether it was the typical case of buying the dip or short covering, we did say in our last note that the investors have been looking for an excuse to sell. The Trump-Russia saga has eased off and there are signs emerging that a resolution could be in sight soon so that traders can finally focus on the things that matter. However, with Trump on an international tour for the first time as a US President, where sensitive issues matter the most, traders had better be on the watch for sparks that could cause brand new scandals. Besides Trump visiting Saudi Arabia and Israel, all eyes will be on Iran, where elections are taking place today.
Iranian Elections A Major Risk Event
It’s decision time in Iran. Hassan Rouhani, the current president of the country, and the presidential candidate, has pulled Iran out of its dark days and has executed strategies which have brought more stability and growth in the country. Over in the US, Trump has indicated that he would sign the extending sanction waiver deal for Iran. Should Rouhani win the election race today, the crafter of this deal, it will be a reassuring sign. The other presidential candidate, Ebrahim Raisi,
has also indicated that he is going to keep the current sanction waiver deal, however, with Rouhani you have a track record that you can rely on. Raisi does have a point though. The fact that the public has not felt relief despite the improvement in the economic growth could boost his chances to win the election. Raisi is promising a more stable outlook.
The current presidential election outcome in Iran may not have much impact on the oil price in the short term but with Rouhani back in the office, investors would feel a lot more comfortable when it comes to the OPEC efforts of fading the global supply glut. Iran is still out of the cat-and-mouse game around oil, but we do believe that the country is very much interested in balancing the oil market.
Safe Haven No Longer In Play
The wheels are back in motion, as traders gained confidence after the video emerged about Comey. The President of the US appears to not have asked Comey to stop the investigation about Russia’s involvement in the US election. For now, the yellow metal is trading in a tight range after retracing from its highest point for this month. The resistance of 1270 is keeping the pressure on the price and downside is protected by the support of 1230. Considering that we are trading above the 100 day moving average, this could be just a little technical pull back before the precious metal resumes its rally.
Brazil: The Worst Market in Latin America
Only a few days ago, Brazilian equities were shining the most among Latin America, but when it comes to Brazil, don’t count your chickens before the eggs have hatched. Only a few days ago, Brazilian equities were shining the most among Latin America, but after yesterday’s rout, this market is looking at a year to date loss. The greenback is showing some weakness after recovering some of its losses against the G10 basket but when it comes to currencies the focus is on the Brazilian real, which tumbled after a fresh political crisis threatened President Michel Temer’s reform agenda. The equity market also took a massive hit and many circuit breakers triggered yesterday. Long story short, the Ibovespa is sitting at the bottom of the pile and it will take an act of God to take it out of there.