Ceasefire at risk after US and Iran attacks

Good morning

It was a down day in the equity markets yesterday and we could see further losses today as reports of US strikes on Iranian targets hit the newswires. The US insist they acted in self-defence and regard the ceasefire as still in place.  Oil prices spiked higher but have reversed those gains as fears of escalation seem to have diminished for now.  Trump is due to visit China next week and it has been reported that China officials are seeking an end to the Iran war before he makes the trip.  Trump still makes threats about large scale attacks on Iran if they don’t find an agreement soon.

China meanwhile has been buying gold again, with purchases in April reported to be as much as 260,000 ounces, taking advantage of the dip brought on by the Iran war to build their coffers further.  Gold is currently around $4,700, pretty much in the middle of the range seen through April of $4,500 to $4,900.

The US dollar had made gains through the afternoon with GBPUSD and EURUSD trading down from highs of 1.3630 and 1.1775 to 1.3545 and 1.1720, both pairs are now off those lows but it is GBP which has come off a bit worse, with GBPEUR currently 1.1565, 30 pips or so off the weeks highs, not a significant move but the lowest levels we’ve seen so far in May.  Trump has given the EU until 4^th July to make a trade deal or he’d raise tariffs considerably higher.  UDSJPY has crept up to 157.00 but so far we’ve seen little sign of any intervention, the most recent being back on Wednesday morning when spot was up around 157.80.

In the UK the news is awash with stories of Labour and Tory losses in the local elections although many results are still to be reported. Reform are the big winners so far, while Greens have so far made very little impact.  Plenty of articles suggesting Starmer should step down although he has given so sign he will go willingly.  Rayner and Burnham are said to be in the running with Rayner slightly out of favour according to some press reports. It could be a tough weekend for Starmer.

In happier news, Sir David Attenborough reaches 100 years of age today.  A very impressive feat for a man who has done so much in his life.  He was Controller of the BBC back in the 1960’s but is of course better known for his natural history programmes.  Indeed, it is strange to watch any wildlife series that doesn’t have him narrating. 

In sport, Villa overturned their one goal deficit with a 4-0 win over Notts Forest to put them into the Europa League final where they will meet Freiburg.  Crystal Palace became the third English team to make a European final by beating Shakhtar Donetsk, they will face Rayo Vallecano in the Conference League final.  Attention now turns to the Premier League fixtures this weekend starting with Liverpool v Chelsea this weekend which could be an interesting match.  Man City will be hoping to close the gap to Arsenal as they take on Brentford.  I’m hoping Arsenal beat West Ham on Sunday, Spurs then have to beat Leeds on Monday night, that’ll be difficult but it is a massively important match for Spurs. Well, I guess they all are at this stage.

Looking ahead to next week’s economic calendar, US CPI inflation looks like the highlight, we’ll also have US PPI and retail sales.  RBNZ inflation expectations are out in the early hours of Wednesday morning and UK GDP is out on Friday.  Before then of course we have today’s US nonfarm payrolls, a headline of around +60k is expected but there are some looking for a higher headline after the better than expected ADP number earlier in the week.  The unemployment rate is expected to stay at 4.3%.

Have a great day, and a great weekend as and when it comes…

-  10.45 Feds Cook speaks

-  13.30 US nonfarm payrolls

-  13.30 CAD employment

-  15.00 US Michigan sentiment survey

-  17.00 ECBs Schnabel speaks

-  17.15 ECBs Nagel speaks