Trump’s tales are still muddling markets

Summary

The ongoing Middle East war is dampening market expectations of a return to normal conditions, leading to continued uncertainty. This geopolitical tension may impact various assets, particularly those sensitive to global conflict and risk appetite. The lack of clear resolution or de-escalation is likely to maintain market volatility.

Market Impact

The prolonged conflict may lead to increased demand for safe-haven assets such as gold (XAU) and the US dollar (USD), potentially at the expense of riskier assets like stocks (SPY) and cryptocurrencies (BTC). The uncertainty could also lead to higher oil prices (WTI), affecting energy-related stocks (XLE) and the broader market.

Key Drivers

• Geopolitical tensions in the Middle East
• Prolonged conflict and lack of clear resolution
• Risk-off sentiment and flight to safe-haven assets

Risks

• Escalation of the conflict leading to broader regional instability
• Disruption to global oil supplies and increased prices

Time Horizon

Medium Term