Agreement like a tanker in a strait
Even on Friday markets were dominated by positive sentiment that even unsettling reports from the Persian Gulf region could not erase. Then the Iranians stepped in, announcing the full opening of the Strait of Hormuz, triggering another wave of transactions. Brent crude briefly fell by more than 10% and broke the 90 USD per barrel ceiling. Euphoria spread across markets like oil from a damaged tanker.
Stock indices shot up, some reaching historic highs (e.g., the broad WIG on the Warsaw Stock Exchange surpassed 13.5 k points). The shift to risk‑on was painful even for the U.S. dollar, which by Friday afternoon was increasingly losing footing. The EUR/USD rate for the first time in two months approached 1.185 USD. By Friday the currency market hesitated, and the euro‑dollar turned southward.
The weekend, however, instead of promised peace talks, brought another wave of tensions and rather unsettling reports from the Middle East. The deadline for the preliminary ceasefire expires tomorrow, and the parties allegedly finally entered some dialogue on Pakistani soil, but specifics remain as elusive as medicine.
Everyone asks whether – amid threats, mutual insults, or real shooting at commercial ships – there is room for any agreement? At the moment Iran and the U.S. seem to share only one thing: the desire to end hostilities.
It may be the most important aspect, but there are many obstacles on the way. And as the chances for a quick peace dwindle, the desire to realize profits by investors grows.
Monday’s fact selling, Tuesday’s rumor buying?
The first part of Monday’s session can be seen as profit taking by investors. With an empty macro calendar it is even harder to get impulses unrelated to the Middle East situation. And from there, instead of transporting the oil itself, we received a higher valuation.
Although the main culprit is today’s opening with a generous upward gap, and the rest of the trade seems fairly flat, we are still talking about multi‑percent gains compared to Friday’s close.
Brent is priced at almost 95 USD per barrel, and WTI at 87.5 USD. Asian markets still looked good, with Tokyo and Shanghai ending trading with decent gains. Unfortunately, early afternoon in Europe already shows a clear discount on major indices, from -0.5% in Amsterdam to -1.5% in Milan.
Behind the base markets follows Warsaw, where the WIG20 loses more than 1%. The opening on Wall Street also looks bearish, so it will not be an easy day for bullish markets. Today’s investor sentiment translates into a stronger dollar, and consequently a weaker zloty.
Although the main part of the movement is still driven by the first hours of Monday’s trading, the following lull can also be considered a prodolar signal.
After 13:00 the EUR/USD rate hovers at 1.177 USD, the euro stays above 4.23 PLN, the dollar does not exceed 3.60 PLN, and the franc broke 4.60 PLN.
