Yesterday's clash and the weekend's re-closure of Hormuz by Iran has knocked risk sentiment a bit as this week opens, leading to a dip in US equity indices.
- It is a relatively quiet open to the new week, with no major economic calendar items scheduled for today. Markets are looking closely at the prospects for a US/Iran peace deal with talks set for Pakistan Tuesday and the ceasefire currently set to expire the next day. Currently, Iran is refusing to attend the meeting after the weekend saw Iran close the Strait of Hormuz after briefly reopening it, which had led to strong market optimism. Perhaps in return the USA, enforcing a blockade of Iranian ports, attacked and boarded the Tousa, an oil tanker heading from Iran to China with cargo. ThPreditis has led markets to reopen with less bullish sentiment today, which has sent major US equity indices like the S&P 500 and the NASDAQ 100 lower, after both closed at new record highs last Friday.
- Prediction markets like Polymarket are still showing implied probabilities indicating that the ceasefire will be extended, a USA/Iran peace deal will be agreed by the end of May, and Iran will agree to surrender its enriched uranium by the end of 2026. I doubt that the crowd are correct about this, I believe Iran will play games and try to wait Trump out by prolonging the conflict while giving either minor or fabricated concessions.
- Day trading S&P 500 futures or other contracts on the long side could be interesting today. Trend traders will be long of this index and the NASDAQ 100 also.
- Crude Oil is slightly higher this morning, getting a small boost from the Tousa incident, but it is only a small rise.
- Gold and Silver are looking weakly bullish, but the continuing recovery in precious metals does not look very impulsive. I think short-term long trades are risky here.
- Bitcoin is trading lower after making a failed bullish breakout beyond $75,000 last week. Bitcoin's failure to rise strongly while US stock markets have been soaring is telling us that this cryptocurrency, and maybe crypto in general, does not shine as a speculative opportunity any more in the eyes of most.
- In the Forex market, the Euro has been the strongest major currency since today's Tokyo open, while the Australian Dollar has been the weakest. The USD/JPY currency pair is rising weakly after finding support below ¥158. Trend traders will still be long of USD/JPY in many cases, although it is hard to feel very optimistic about that trade.