US stock markets fell quite substantially yesterday as the question of US tariffs on imports reopened with a new 15% global tariff loomed into view.
- Markets have been dominated over the past day by fairly strong falls in the major US equity indices, although the S&P 500 Index held up better than the others, as President Trump implemented a new global 10% tariff on all imports into the USA and is working on implementing raising it to 15%. This raises the question of what will happen to imports from countries such as Australia and the UK, which have already agreed 10% tariff deals with the USA.
- Following leaks yesterday which suggested doubts inside the US administration and military leadership that the USA could handle a protracted war against Iran without dangerously exposing itself to China, President Trump came out swinging, saying that while he would prefer a deal, his administration believes a war could be won easily. This, along with much chatter yesterday about an Iranian attack on US or Israeli interests (the USA partially evacuated its embassy in Beirut, while Israel has advised all its former senior figures to travel to Israel ASAP), has raised the perceived likelihood of a US attack on Iran in the prediction markets. Polymarket against sees an attack as likely by 15th March, which is less than three weeks away.
- The perceived growing probability of war over Iran has continued to send WTI Crude Oil to flirt with its 6-month high, which was breached slightly yesterday. Trend traders will probably already be long, but as always with geopolitical crises and shocks, there is a high chance of a sudden massive reversal which could lead to a big loss. I am long of WTI Crude Oil but will probably exit rapidly once either a deal is struck or war breaks out, as there is a good chance war would barely interfered with the supply of crude oil.
- Precious metals gained very firmly yesterday, with Gold trading well above $5,200 and reaching its highest price since its huge drop ended at the start of this month. However, the rises seem to have halted or at least paused today.
- Bitcoin broke below the key support level at $65,786 and is falling towards the long-term low support at $61,229 which would probably be extremely decisive. If the price breaks below that and holds, Bitcoin could easily see a much stronger drop to $50,000 or even lower as the crypto bubble continues to deflate.
- In the Forex market, the strongest major currency since today's Tokyo open has been the Australian Dollar, while the weakest has been the Japanese Yen, putting the risk barometer currency cross AUD/JPY in focus. The Forex market may be tricky to navigate this week with potential twists and turns in the US tariff story.
- There are no high-impact economic data releases due today.