US and Iran continue to fight it out

Good morning

Firstly, many apologies for a possible late delivery of Friday’s report.  Email issues at our service provider meant that while we received emails intermittently, sending emails was very delayed and random.  Hoping it’s all back to normal this morning.

I do hope you had a good weekend.  The weather was fantastic yet again although I did experience temperatures in the low 20’s as we ventured into Norfolk for a short visit on Saturday.  We have had little respite to the hot weather here, today promises to be the coolest day for a while at 27°c but we’ll be back into the 30’s tomorrow.  Some storms may arrive later in the week but I am lucky enough to have another short week as we jet off with our NZ visitors to Portugal for a few days in Porto and Lisbon, and a bit in between.  Believe it or not I have never been to Portugal so I am very much looking forward to getting away….again!

England footballers have made it to the semi-finals of the world cup having beaten a spirited Norway team in extra time.   England were good but not firing on all cylinders and I’m hoping we see a bit of improvement in the next match against Argentina on Wednesday evening, the winner will face either Spain or France, that match will be played tomorrow evening.     

England’ rugby players returned to winning ways with a dominant 73-8 win over Fiji.  Next up for England is actually Argentina on Saturday.  And England’s cricketers have beaten India 4-0 in the T20 series which puts them at the top of the ICC world rankings.  Next up is the three-match ODI series which begins tomorrow, India are top of the world rankings there, England a lowly 8th.   And congratulations to Sinner, means Wimbledon champion for the second year running, beating Zverev in four sets.

Anyway, so much sport and so little on the markets so far.  Well I am surprised equities are not more negative on the open this morning as news of ongoing military strikes between US and Iran continue.  So much for Trump’s idea that this will be quick and easy, that Iran will roll over or plead for peace.  Most Asian markets lost ground overnight and although European markets are generally lower I’d have expected larger losses.  Oil prices were up on the open but currently a dollar or so off the highs. 

In currencies, the US dollar opened a little firmer with GBPUSD and EURUSD seeing lows around 1.3370 and 1.1385 but both have since returned to Friday’s closing levels, still below last Friday’s highs which saw the pairs reach 1.3450 and 1.1460.  GBPEUR has slipped from Fridays highs which came in around 1.1750, now 1.1725.  USDJPY took advantage of the stronger US dollar reaching 162.35 earlier this morning, GBPJPY is currently just a few points above 217 as I type. 

Here in the UK we have one week left before Andy Burnham becomes Prime Minister.  I feared life under Starmer, and I fear that life under Burnham will be even harder, particularly for those slightly better off who are highly likely to face higher taxes in order to fund Burnham’s spending spree.  At some point we’ll see what Burnham’s cabinet looks like, plenty of speculation until then as to who will take the major roles alongside the new Labour leader.

Little on the calendar today other than central bank officials.  Could be interesting to hear why RBNZ’s economist Conway has to say following last week’s rate rise from RBNZ.  Markets are pricing a further 50bps of rate rises this year although there are a few major banks that think one more rise is more likely.  As with other central banks, so much depends on when, or if, we see a resolution to the Iran war and what such an agreement would actually look like.

US CPI tomorrow is the highlight of the week’s calendar.  Equities guys will be watching the raft of results due to be released as we get into Q2 reporting season.  Fed’s Warsh will be testifying to the House Financial Services Committee on Wednesday.  There is an FOMC meeting at the end of this month, the blackout period will begin this coming Saturday so expect a few Fed officials to offer their thoughts ahead of that.

Have a great day…

-  10.25 Feds Bowman speaks

-  17.30 Feds Waller speaks

-  17.45 ECBs Schnabel speaks

-  19.00 BoEs Pill speaks

-  19.00 US monthly budget statement

-  23.00 NZ business confidence

-  23.00 RBNZs Conway speaks

-  00.01 UK BRC retail sales

-  01.30 AUS consumer confidence

-  04.00 China trade balance