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I have a feeling I mightn’t be the only person surprised by today’s moves on the ASX, the most recent closing moves on Wall Street notwithstanding.
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As United States markets shrugged off wider Iran war turmoil, the ASX did the same on Tuesday – the first trading day after a four-day Easter weekend – even jumping as high as +2.6% intraday before falling back.
Still, the Australian bourse briefly touched 8,800 points, some 400 points away from its February record high of 9,200 points. Not terrible.
We’re six weeks into the Iran war now; about a month ago, Goldman Sachs (or Morgan Stanley, this HotCopper journalist can’t quite recall, though feels they’re basically the same thing anyway) said they expected stock markets to take two weeks to digest the whole thing. Well, they took a little longer.
But to be fair, the world wasn’t expecting Iran to be so effective at executing its stranglehold on the Strait of Hormuz, perhaps informed by recent memories of the Houthi attacks on vessels navigating the Red Sea in relatively recent memory.
And it is the Strait of Hormuz which has become the focal point of this war, for much of the world’s hydrocarbon needs flow through it, and in that way, Iran has been able to start a new energy crisis (even though the U.S. is now the world’s largest producer).
And it is perhaps interesting, then, that the market Down Under is having such a gangbusters Tuesday. It’s also worth pondering whether the U.S. should have been so excited on Monday, too, seeing as the Iran war is carrying on quite unimpeded and the most recent ceasefire deal has been rejected.
In one list of stipulations from the Iranian side, as part of a Hormuz re-opening, Iran wants a $2M fee from each ship that travels through it. That’s a very Trumpian manoeuvre, but one unlikely to win favour with anyone.
Israel has continued to hit Iranian gas plants; the U.S. bombed a big bridge over the easter break (it’s perhaps unsurprising the U.S. chose easter to do this, given that the Donald Trump administration has an undercurrent of possibly outdated Christian nationalism) and Iran’s neighbouring countries aren’t particularly clear in whether they’d like the United States to cease firing or keep firing.
The UAE, for its part, offered the U.S. help last week with the latter.
Elsewhere in the same story, Brent crude remains elevated, gold remains largely suppressed, and so there’s only one question that remains.
Has it, in fact, taken six weeks for investors to digest this war, and are we now seeing a great shrugging of the shoulders? Russia continues to invade Ukraine, and markets have been going crazy. Israel bombed Gaza for two years straight, and markets carried on being crazy.
It may be the case that while we sit on the brink of World War III – if you subscribe to the belief that we aren’t already in it, which this finance journalist suspects we might well be – the markets will continue to go crazy.
Which historically happens more often than not. Though it is possible, Wall Street, if not the global market, hasn’t really clued into how devastating a caustic soda shortage could be.
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