The human costs for global conflicts are of course unbearable for the victims and also have economic costs that analysts currently want to estimate.
President Trump has reportedly approved a plan to bomb Iran bombing, but has not yet raised the green light for measures. The main problem for investors is what the Iran conflict with the oil price could have and how this affects the strength of the dollar. This will in turn influence the future decisions of the US Federal Reserve whether the interest rates should be reduced or not.
Trump, of course, wants Fed chairwoman Jerome Powell to reduce interest rates. He insulted Powell about the truth this morning to underline this point: “Too late – Powell is the worst. A real dummy that costs America billions of dollars!“”
One possible result is that, if he decides to bomb Iran and the conflict leads to a longer disorder of the oil offer, strengthen the dollar and at the same time damage the global economy. (The oil markets are set in dollars, and the rising oil prices would therefore trigger a higher demand for US currency.) These two factors – economic weakness, but dollar strength – could urge the Fed to carry out the interest reductions requested by Trump.
Converas Antonio Ruggiero sent a note to customers in the dollar edition this morning: “Rising geopolitical tensions in the Middle East this week provided the support of the Greenback, whereby the DXY was wearing over 98,800 on Tuesday, before the facade of the gem of the global bike in front of the global oill prices, which is on the frequents of the facade. -Dollar the raw demand is able to record the additional demand for USD.
At JPMorgan, Joseph Lupton and Bruce Kasman published a note in which it was argued: “The risk premiums associated with the Middle East War are already sufficient to fully compensate for the pillow provided by the oil supply climb (from Saudi Arabia). This leaves a net resistance to the global GdP growth of 0.6% this year. Tempo ”, they said.
“According to our model, a complete restriction of Iranian oil exports (1.8 MBD) would raise the oil prices to almost 100 USD/BBL and, if they are preserved, reduce the global GDP by a full %point (or, or, 2 %, in 2H25), and global recession threatens,” she said.
As always, the Fed is waiting for more data and less uncertainty.
According to the Daiwa Capital Markets, the uncertainty of the war will not help: “The Trump government has no final interventions in the Iran Israel conflict-with the planned course that either calm down or potentially triggered a wider conflict that can disturb the energy markets. Customers expect additional conflicts. Assets.
Here is a snapshot of the campaign in all global markets this morning:
- South Korea Kospi had increased by 0.19%.
- India Nifty 50 Was flat.
- The S&P 500 Closed yesterday. The market is now closed for the Juneteenth holiday.
- The Great Britain FTSE 100 Slid by 0.3%in early trade.
- China SSE Composed had dropped by 0.82%.
- Japan Nikkei 225 had dropped by 1%.
- Hong Kong Hanging had dropped by 2%.
