Stocks Falling As Traders Await News on US/Iran
Lack of Clarity on US/Iran Talks
US stocks are looking weaker again today as uncertainty persists around US/Iran peace talks and oil prices turn higher once again. Incoming news-flows remains on Iran remains the key drive for now and while a lack of clarity persist, stocks look skewed towards further downside given the backdrop of higher oil prices and a stronger US Dollar. Higher energy prices are keeping inflation risks (and hawkish Fed implications) front and centre today. We’ve heard several Fed members this week referencing inflation risks in their outlook, forecasting higher US rates for longer as a result. While this narrative holds, stocks will struggle to regain bullish momentum with a deeper correction lower looking more likely.
Two-Way Risks
Looking ahead, the risks are even split for stocks. If the Iran war persists and energy prices remain high, stocks will fall deeper as the Fed turns more hawkish. Indeed, if the situation deteriorates and a US ground assault is announced or attacks on Iran energy sites resume, stocks could plunge as oil and USD surge higher. However, if we get news of confirmed peace talks between the US and Iran, this should fuel a sharp relief rally in stocks with crude and USD coming under pressure. Additionally, if progress is seen towards peace and a deal starts to look likely, this could cause a seismic shift in markets with stocks poised to test YTD highs before a fuller breakout if a peace deal is announced.
Technical Views
ES (Mini S&P Futures)
For now, the index remains above the 6,505-25 – 6,587.50 support area. With momentum studies bearish, risks of a downside break are seen and focus will turn to deeper support at 6,243.25 next if we do break lower here.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.