King of the stone age?

While the launch of Artemis II this morning provided us all a brief moment of hope for the advancement and cooperation of the human race, and maybe even a glimmer of peace for mankind, Trump once more brought us all back to Earth and the current harsh reality thereon not long after through his prime-time address. “We’re going to bring them back to the stone ages where they belong” warned the president. Thus dashing hopes of an imminent peaceful resolution to the Iran “excursion”.

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Markets were unsurprisingly volatile throughout the address, as traders struggled to gauge its tone and upshots through the early stages of the 19-minute ramble. Mention of “getting very close” to achieving their objectives, unclear as they may remain, saw a brief continuation of this week’s strong risk on moves. However market participants soon heard and digested the more telling message as Trump outlined plans to ramp up bombing, to “hit them very hard over the next two to three weeks”. This rhetoric on increased military action and a further drawn-out campaign saw a swift and heavy reversal in this week’s price action, in which we had seen a recovery in equity and metal markets, as well as dips in energy markets.

As it became clear that de-escalation had been taken off the table for the time being, repricing was quick and clear. Oil markets surged anew, WTI and Brent both +5%. The US dollar resumed its upward move, DXY reclaiming the 100 handle, AUDUSD -0.75%. Metals declined on the back of this dollar-driven deleveraging, silver -4.5%. And global index tables became a sea of red as ceasefire hopes collapsed, Japan -2.5%, Germany -2%, Australia -2%. Cryptos likewise turned sharply to the downside, Bitcoin -3% and Ether -5% in the Asian session.

Will we see more risk removed heading into what is a long weekend for many global markets? Or will the US administration be moved to jawbone ahead of Good Friday? Again short term traders will be looking to take advantage of continued volatility either way.