Equities markets were back in the red on Thursday following President Donald Trump’s primetime speech last night on the Iran war.
The FTSE 100 fell over 1% at the open before grinding back upwards to be around 0.3% down by late morning.
The price of a barrel of Brent crude jumped once again to reach $109, a 7% rise over the past day. WTI oil rose a similar amount to hit $107.
Investors’ hopes that Trump would use the speech to announce a deal with Iran, or that the US would pull out of the war imminently regardless, were dashed by his proclamation that the US military will escalate its attacks over the next ‘two to three weeks.’
This was despite Trump also claiming once again that his military objectives were near to ‘complete,’ and alluding to a deal with Iran being discussed.
The US president also repeated his demand that European countries take the lead in forcing a re-opening of the Strait of Hormuz to shipping. There have been no signs of that call being met.
Futures prices indicate US markets will follow the UK into the red when they open for business this afternoon.
See also: Return of the oil bulls after the Hormuz supply shock
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Global markets took a step backwards overnight after Donald Trump’s live address, with the mood shifting sharply from the cautious optimism that had been building in recent days.
“From a market perspective at least, the speech appeared to have the opposite effect investors were hoping for, with oil pushing higher, bond yields climbing, and equity markets falling back.
“Rather than offering any fresh clues on a path toward de-escalation, Trump largely repeated a familiar set of talking points that traders have already digested across social media in recent weeks,” Britzman continued.
“The result is a classic risk-off move across asset classes as hopes for further progress toward de-escalation gave way to renewed uncertainty.”
AJ Bell investment director Russ Mould, added: “Investors didn’t get what they wanted from President Trump’s address to the American people and have reacted accordingly.”
“Famously, uncertainty is kryptonite for the markets and between the contradictory messages from Trump, disputed claims on both sides, and the lack of clarity on a plan which can provide a resolution to the conflict they are getting a heavy dose of it right now.
“Stocks have been volatile in recent weeks as sentiment shifts on the latest signals, but oil, though it has also experienced significant shifts, has rarely dipped below $100 per barrel since its initial surge,” he continued.
“This may be a better indicator of where we are than the latest movements in global indices as the world is forced to confront a situation where around 20% of the world’s supply is disrupted.”
See also: Scottish Widows: Retail investors stay bullish despite global uncertainty
