The tit-for-tat situation between the us and Iran escalated when Mr Trump issued an ultimatum: he ordered the us navy to destroy all Iranian speedboats that were “harassing” us vessels, sending oil prices soaring further and crude oil soaring more than 30 per cent in anticipation of further supply cuts. This trading day, the market will usher in a series of tests: European and American PMI with the first please data attack; The eu summit; The house of representatives voted on a new stimulus bill worth nearly $500 billion.
The situation between the United States and Iran has escalated. At one point, oil prices soared more than 30%
US President Donald trump said on Monday that he had ordered the us navy to destroy all Iranian speedboats that were “harassing” us ships. Trump announced the news on social media that morning.
At a news conference later in the day, deputy secretary of defense David norquist said trump was warning Iran that U.S. ships had the right to defend themselves.
According to FoxNews, citing the us navy’s fifth fleet, “on Wednesday, six us navy ships and apache attack helicopters were engaged in military exercises in international waters off Iran when they were repeatedly harassed by 11 Iranian irgc naval vessels.”
A fifth fleet statement also accused the Iranian vessels of many dangerous maneuvers, saying that “Iranian vessels repeatedly passed in front of and behind American vessels at close range and at high speed.” The us said the move violated international maritime “rules of navigation” and increased the “risk of miscalculation and collision”.
As for the clash, Iran’s islamic revolutionary guard corps said “any miscalculation will be met with a firm response from Iran,” according to the BBC. Iran said it had stepped up patrols in the gulf after the us navy blocked the passage of an Iranian ship earlier this month and accused the us of packaging the ship clash as a “Hollywood version of events”.
Relations between the United States and Iran have been strained since January following the assassination of Iranian general omar suleiman at the behest of U.S. President Donald trump.
Us WTI crude rose more than 30 per cent on Wednesday after falling to a record low for the year as a coronavirus outbreak reduced demand. Iran produced 3% of the world’s oil last year.
Brent crude, meanwhile, bottomed out and continued to rebound after hitting its lowest level since June 1999, before returning above $20, up 5.4 per cent on the day.
But Jim Ritterbusch, President of Ritterbusch and Associates, cautioned, “this by no means means that prices have hit bottom, as the forces of supply and demand that pushed oil into negative territory this week remain.”
A jump in oil prices and hopes of more government stimulus to cushion the economic blow from the outbreak helped calm global stock markets on Wednesday. By Wednesday’s close, the dow was up 1.99% and the s&p 500 up 2.29%. The nasdaq was up 2.81 percent.
However, Ben Philips, chief investment officer at EventShares ETF, warned that “small caps and midcaps are still not seeing a recovery, which tells me that the economy is still in trouble.”
Spot gold also rebounded strongly on expectations of more fiscal and monetary stimulus, rising as much as $40 to around $1,718 on Wednesday and hovering around $1,510 in Asian trading on Thursday.
Phil Flynn, senior market analyst at Price Futures Group, said: “the reason for the recent surge in gold is that trump tweeted a message about Iran. Apparently, in recent days, Iran has been playing a cat-and-mouse game with American ships. Trump basically gave the order to shoot at random.”
Charlie Nedoss, senior market strategist at LaSalle Futures Group, also commented that trump’s tweet boosted gold, which had already been tested for support on Tuesday. In addition, Nedoss points out that a weaker dollar tends to help gold because they have an inverse relationship.
He said it was difficult to gauge the likelihood that Mr. Trump’s tweets would spark a military confrontation. Yet the gold market has taken note.
“It’s the perfect storm for gold,” said Michael Matousek, chief trader at US Global Investors. With all this stimulus going on, a steady stream of buyers is buying gold. “
“Gold prices are an economic and political barometer of our well-being, and investors are doing what central Banks are doing — buying gold to support their currencies,” George Gero, managing director at RBC Wealth Management, said in a report.
Today three tests to attack, beware of market riots
1, the United States and European PMI work together to preliminary data
For the week, Thursday’s data will be the most concentrated, with a spate of PMI readings from Europe and the us, which span the economic blockade and could hit markets.
The preliminary Markit manufacturing PMI for April in France, Germany, the euro zone and the United Kingdom will be released in a short period of 15:15-16:30. After that, the preliminary Markit manufacturing and services PMI for April in the United States will also test the market.
Initial claims for state unemployment benefits are expected to rise 4.3 million in the week ended April 18, according to dow Jones data.
The cumulative number of claims since the end of march has reached more than 26.3m, which economists believe will confirm weekly claims peaked.
According to a government report released on Thursday, 5.245 million americans applied for unemployment benefits last week. Adding in the three initial claims reports from the labor department, U.S. jobless claims climbed to 2.02 million in the past four weeks. That is slightly lower than the 22.442 million nonfarm jobs added since November 2009. The U.S. economy began adding jobs again in November 2009 for the first time since the recession.
Diane Swonk, chief economist at Grant Thornton in Thornton, Texas, said the pace of the rise in the unemployment rate has slowed, but the hit to the labor market has been significant.
- The house of representatives votes on a new stimulus package
On April 21, the U.S. senate unanimously passed a nearly $500 billion funding bill to provide assistance to small businesses affected by the COVID 19 outbreak, as well as funding for hospitals to handle more patients and virus testing.
The bill provides about $484 billion in funding, including $321 billion for the small business loan program, $60 billion for a separate emergency disaster loan program also for small businesses, $75 billion for hospitals and $25 billion for a national novel coronavirus test.
The house of representatives will vote on the bill on Thursday. It will be the fourth new outbreak response bill in the United States. Together, the United States has provided about $3 trillion in aid since last month.
House speaker Nancy Pelosi said Wednesday the house will pass congress’s latest new pandemic assistance bill on Thursday, paving the way for nearly $500 billion more in economic aid during the outbreak.
The new pandemic has forced many countries to extend blockades to contain the spread of the virus and to undertake unprecedented fiscal and monetary measures to support their economies.
In two tweets Tuesday afternoon, President trump urged lawmakers to approve the bill and said he would sign it into law.
It is also understood that the two parties are working on a new, broader and larger bail-out bill. Congress is already working on a fifth new pandemic response bill. Schumer said it could be similar in size to the $2.3 trillion economic stimulus enacted on March 27.
House speaker Nancy pelosi said the next stimulus bill would contain “massive” aid to states, but senate majority leader mitch McConnell wants to slow federal aid and support allowing states to declare bankruptcy.
- Eu summit
The European commission is considering a 2 trillion euro (2.2 trillion dollar) economic recovery plan ahead of Thursday’s meeting of eu leaders as it tries to bridge differences over recent weeks, foreign media reported.
The European Union’s 27 heads of government will hold a video conference to discuss next steps in response to the novel coronavirus pandemic.
According to an internal commission document, the compromise would use part of the eu’s existing seven-year budget and set up a new financing mechanism. Under the plan, the eu will include a €300bn recovery fund in its 2021-2027 budget and raise €320bn through capital markets. The document does not say how the commission will achieve the 2 trillion euro total.
Markets are pessimistic about the plan, with no specific road map to guide the EU summit is likely to collapse again, EU leaders will face off on the recovery fund, northern and southern European countries are always divided on the issue of joint bond issuance, it will take time to find a unity tool acceptable to all 27 member states.