ASX set for shaky start amid US-Iran uncertainty
Andre Janse van Vuuren and Julien Ponthus
The Australian sharemarket is set for an unsteady start to the week as US President Donald Trump continued to threaten Iran even as talks began in Switzerland between his vice president and Iranian officials on next steps in the interim agreement signed last week to end the war.
Futures are pointing to a dip of 16 points, or 0.2 per cent, at the open for the ASX, but there are fears of another spike in oil prices this morning as Tehran said on the eve of the talks that it closed the Strait of Hormuz again over Israel’s ongoing military campaign in Lebanon against the Iranian-backed Hezbollah militant group. The interim deal is meant to stop fighting on all fronts, including Lebanon. Iran has said talks must first address that issue.
The US says shipping traffic on the crucial waterway continues, and Trump has threatened to impose American tolls in the strait if a final deal with Iran isn’t reached in 60 days. Other issues include unfreezing billions of dollars in Iranian assets and addressing the heart of tensions: Iran’s nuclear program.
As the meetings got underway on Sunday in Switzerland, Trump said in a social media post that he would strike Iran again if it doesn’t “immediately stop their highly paid PROXIES in Lebanon from causing trouble.”
He also warned Iran that the US might start collecting tolls if there’s no deal. Speaking on Sunday to Fox News,Trump said he told Iranian leaders directly that if they close the Strait of Hormuz, “You won’t even make it back” to Iran, using an expletive.
While a hard-won interim deal has signalled a pause in US-Iran hostilities, Sunday’s discussions are likely just the start of protracted wrangling that will span topics including Iran’s nuclear capabilities and economic relief for Tehran.
With US cash markets closed for the Juneteenth holiday, S&P 500 futures declined after the benchmark posted its best week since the end of May. Europe’s Stoxx 600 dipped 0.2 per cent.
Brent crude rose 0.9 per cent to above $US80 a barrel, paring a 7.7 per cent drop for the week, but closed trading on Saturday (AEST). Oil will resume trading this morning.
The latest developments are a test to the optimism that has seen a technology-led rally in stocks gain further momentum after the US and Iran lifted a months-long dual blockade of the Strait of Hormuz.
“Of course, with Trump there can always be some derailment along the way, but we believe that we’re set into a new phase of de-escalation,” said Alexandre Drabowicz at Indosuez Wealth Management. He advised investors not to rush to conclusions about a permanent deal.
UK gilts led a broad advance in European bond yields after Greater Manchester Mayor Andy Burnham won a seat in Parliament, handing him a pathway to challenge Prime Minister Keir Starmer for his job. Investors are debating whether a Burnham premiership might shift to a looser fiscal policy.
The pound outperformed most major currencies, while the dollar held at its highest level since March. Bitcoin snapped a three-day losing streak. Gold headed for a third straight weekly loss, trading around $US4150 an ounce.
Bloomberg, AP
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