Daily Brief – Markets

Markets

Once again, markets were wrong footed over the weekend by POTUS, who had stated that he would decide in 2 weeks whether to bomb Iran. That 2 weeks turned out to be 2 days. With Iran talking to Europe’s leaders over the weekend in Geneva, Switzerland markets relaxed and in particular the oil price fell back after investors believed that the 2 week moratorium would lead to de-escalation and Iran-Israel peace. Oil jumped in Asian trading on geopolitical risk, potential Strait of Hormuz closure, and lastly on the ability of the strategic US Oil Reserve to meet the needs of the US for a protracted period; and as night follows day and jumping so gold remains firm.

Brent USD 78.39.
Gold USD 3378.

Japan and South Korea

Improbable for many years post WW2 and especially opposed by older Koreans, the two US allies are making nice most recently at last week’s G7 Summit. Although there has been a formal treaty in place for 60 years, feelings understandably run deep. Now that is changing due to shared concerns over the tariffs imposed by the USA plus the fact that younger Japanese and Koreans like each other and are culturally close. 

USD/JPY 146.67.

European LNG

Europe’s LNG is supplied as follows: 50% by Russia, USA and Algeria, 33% by Norway, and the remainder from the UK, Qatar, and others. Qatar is only 4%. So disruption of Gulf energy supplies will not greatly impact European LNG plus the fact that at this time of the year consumption is at its lowest.

GBP/USD 1.3421.

UK Benefit Fraud

In 2024/5, GBP9.5 billion of the overall benefits bill was lost to fraud. Worse still that is 3.3% of the total. Of that, GBP 1.0 billion is due to official error. On the plus side if that’s possible, that GBP9.5 billion is down on 2023/4 by GBP200 million. Chancellor Reeves has a potential win in reducing that number further if only she can convince her front bench colleagues of the rightness to implement measures to pursue that course.

EUR/GBP 1.1494.

School’s Out

Back in 1975 on this day when rock stars were really rock stars Alice Cooper was giving a concert during the Welcome to my Nightmare tour in Vancouver, Canada. Alice fell off the stage and broke 3 ribs and sustained a head injury. Keen to go on or more likely over fortified with happy pills, Alice Cooper returned to the stage with a bandage around his head before passing out and being stretchered off to hospital. Vintage rock n’roll.

Well, we got no choice
All the girls and boys
Makin’ all that noise
‘Cause they found new toys
Well, we can’t salute ya can’t find a flag
If that don’t suit ya that’s a drag

School’s out for summer
School’s out forever
School’s been blown to pieces

No more pencils, no more books
No more teacher’s dirty looks yeah!

Well, we got no class
And we got no principals
And we got no innocence
We can’t even think of a word that rhymes

School’s out for summer
School’s out forever
My school’s been blown to pieces

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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