Spreadex Market Update

Suleimani assassination aftermath continues to drive markets lower, oil higher



There was no doubt about the market’s focus on Monday, investors processing the ongoing aftermath of the assassination of Iranian general Qassem Suleimani.

Since his death via US-ordered drone strike, things have continued to escalate. Pausing joint operations against ISIS, Iraqi MPs passed a non-binding resolution calling for US troops to leave, prompting Trump to threaten Iraq with sanctions. Meanwhile the President vowed to hit 52 sites in Iran ‘very hard’, ‘perhaps in a disproportionate manner’, if the country – which has cut its commitment to the already unravelling 2015 nuclear deal and has promised a ‘dark day’ for the US – retaliates.

In response, oil furthered its gains. Brent Crude added another 2%, causing it to cross $70 per barrel for the first time in over 7 months. BP and Shell, in turn, pushed higher; the former added 2.2% to hit £5.05, with the latter rising 1.5% to £23.32, both prices respective 7-week peaks.

This couldn’t, like last Friday, prevent the FTSE from falling into the red. The UK index opened down half a percent, returning to 7570 having started 2020 above 7630.

Things were worse for the DAX, which shed another 1.4%, sending the German bourse to a one-month low of 13025. For context, the DAX was at 13450 by the end of trading last Thursday.

The Dow Jones, meanwhile, is currently set to lose 170 points when the bell rings on Wall Street, dragging the index back below 28500 – that’s compared to its early-2020, 28900 all-time highs.

Dealing with its own renewed Brexit anxiety as the markets entered a new year, the pound was flat on Monday, unchanged against dollar and euro alike. That could change following the morning’s UK services PMI; the manufacturing and construction readings were pretty dire, so the currency will be praying for a number better than the forecast 49.1.

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