The outbreak of a full scale war between the USA and Iran over the weekend has caused many markets to open with a considerable gap higher or lower, notably in crude oil which is up strongly.
- The surprise daytime US/Israeli attack on Iran Saturday morning has had time to play out for about 36 hours before markets came online. The notable and understandable major reaction has been for the price of crude oil to open considerably higher, up by more than 7% from Friday's close was seen in late Asian session trading. The war is also giving a strong bid to precious metals, and has caused gaps in several currency pairs or crosses.
- WTI Crude Oil - with the strong advance of over 7%, this may be a good time to "sell the fact" after buying the rumour. Basically, although the Strait of Hormuz is still semi-closed (putting a bottleneck on the 20% of global crude oil supplies which pass through it), the presumption that neither side will seriously menace oil facilities can still survive, even though Iran has attacked three oil tankers in the Strait over recent hours. This suggests that the price may be unable to rise much further. This is the reason why I sold my long position this morning. I might be wrong - if there is major destruction of oil facilities, the price will certainly go higher.
- Gold - this has opened with a gap higher of almost 2%, and the price is rising very bullishly and even approaches the record high closing price made a few months ago. The nervous, crisis-style sentiment around the Middle East war is sending Gold higher. Silver is also benefiting, but interestingly, Gold has outperformed so far today, which is a change from most of last week.
- S&P 500 Index - outside regular hours trading shows this index is trading more than 1.2% below Friday's close, which is a meaningful fall to begin the week pre-market with. The price is falling with bearish momentum and looks likely to challenge the 3-month low price. The area even lower, around 6,500, will likely be extremely pivotal if and when it is revisited, due to the confluence of a recent major bullish bounce and the 200-day simple moving average. Most stock market indices are trading lower today.
- Iran has fired and continues to fire at several countries in the region: Israel, Kuwait (where US sailors were killed), Iraq, the U.A.E., Qatar, Oman, and Saudi Arabia. Civilian areas have been hit and casualties incurred in several of these countries. One of Britain's sovereign bases in Cyprus was hit yesterday, making this Iran's first attack on a European target. Overall, early indications are that the war is going well for the USA and Israel and badly for Iran. Almost the entire top-tier leadership of the country was killed in the opening strike Saturday morning, including the Supreme Leader Ayatollah Khamenei.
- Early this morning Hezbollah attacked northern Israel with rockets and probably also drones. This was answered with a dramatic Israeli response, which included assassinating a Hezbollah politician in Beirut. Hezbollah has done nothing by way of response yet, but we are now likely to see a dramatic Israeli military campaign on Lebanon
- Bitcoin continues to look bearish below the key resistance level at $71,762. It may be that the recent low we saw near the support at $61,229 will become very crucial, as if that level breaks down, the price could fall to $50,000 or even lower.
- In the Forex market, the strongest major currency since today's Tokyo open has been the Canadian Dollar (dragged higher by Crude Oil prices, while the weakest has been the British Pound. The Forex market may be tricky to navigate this week with potential twists and turns in the US tariff story as well as concerns over the potential outbreak of war between the USA and Iran.
- There will be a release of US ISM Manufacturing PMI data later.