Spreadex Market Update

US-Iran, US-China and Fed updates send European markets higher



Heightened tensions between the US and Iran, and further Fed dovishness, led to a decent start in Europe.

After a week spent on the back foot, Brent Crude leapt nearly 2% on Friday. That’s because Donald Trump said the US navy had shot down an Iranian drone that had come too close to an assault vessel in the Strait of Hormuz – something Iran has since denied. This follows another dispute between the two nations, namely Mike Pompeo’s claim Tehran was willing to negotiate regarding its missile programme and Iran’s statement to the contrary.

The morning’s other market mover was a comment from New York Federal Reserve President John Williams, who’s argument that ‘it’s better to deal with the short-term pain of a shot than to take the risk that they’ll contract a disease later on’ was taken as a sign that the central bank is preparing a deep rate cut, even if Williams later clarified that those comments were ‘not about potential policy actions’.

Add onto this Steven Mnuchin saying that, unlike what was reported by the WSJ, Huawei was not a sticking point between the US and China, and that a phone call was set for last night, and the European markets could take back some of the ground lost this week. The commodity-heavy FTSE was up 0.6%, benefiting from the growth posted by its oil and mining stocks. The DAX, meanwhile, was back across 12300 after rising half a percent, with the CAC once again knocking on the door of 5600 following a 0.7% increase.

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