If you’re anything like me, you spent the weekend keeping an eye on the Weekend Wall Street futures trying to gauge where the ASX might go on Monday in response to this weekend’s headlines about a new peace deal between the US and Iran.
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But the ASX hasn’t really responded with the same kind of gusto Weekend Wall Street futures are showing. Even after the Brent Crude price shed US$5/bbl to below US$100/bbl on Monday, while that’s showing up in the ASX Energy Index, the ASX200 broadly is up less than a tenth of a percent.
While the energy majors are no doubt having a downward drag effect, it doesn’t explain the whole story. One thing to take note of is that the CBA price is more or less flat, too.
So what does that mean? Well, to this finance journalist, it says that ASX traders and investors and algorithms alike aren’t paying much attention to this latest round of ‘peace deal’ headlines, more than it’s paying attention to commodity prices. Hydrocarbon commodities at least. (BHP is also flat despite an uptick in gold and copper prices.)
I say a peace deal, but what we actually ended up with was an amusingly titled ‘Memorandum of Understanding’ (MOU) – I say amusingly because any seasoned ASX participant is very familiar with mining companies inking vague MOUs for all kinds of things.
In a familiar turn of events, even before the market opened for Week 22, that fresh peace deal from over the weekend is now freshly in question. Trump has since said, overnight, there is “no rush” for the deal. Assuming there ever was one.
As I’ve written elsewhere, this round of peace talks apparently included stipulations from Iran that the US would pay over US$200B in war reparation costs, that Iran would have control over the Strait, and that Iran wouldn’t hand over any enriched uranium.
Those three factors alone, assuming they’re accurate reflections of peace talks that happened brokered once again by Pakistan, seem like three fatal blows to this latest arrangement.
There’s also the entertaining factoid Iran’s Fars news agency claims US diplomats told their Iranian counterparts to ignore Trump’s social media posts, but that’s neither here nor there.
I wrote at the end of last week that Trump’s re-pivot towards an outwardly pro-negotiation stance seemed to coincide with the US 10Y bond yield last week flirting with the 4.7% level. We know that Trump watches the 10Y yield and tends to make decisions based on it.
If Wall Street has a strong night this evening, maybe the ASX will show more life on Tuesday.
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