Weekly Market Overview
The FTSE 100 in London rose somewhat this week, mainly driven by higher energy prices, with the UK benchmark index being heavily weighted in commodities.
The Bank of England (BoE) kept interest rates unchanged at 3.75%. Andrew Bailey seemed somewhat hawkish, hinting toward a rate hike on borrowing costs if inflation from oil prices due to geopolitical tensions continues, yet he still tried to remain on the fence so as not to spook markets such as the pound (GBP) or UK property prices.
The UK has had some of the worst inflation out of developed nations in recent years, and it seems as if when there are energy issues globally, the UK often gets the worst of it. The UK is populous, with the least economic independence on food and other goods, relying heavily on imports. As oil peaked after the Iran-US conflict in the Middle East, the UK particularly had issues with diesel. Following the 2000s–2010s, which saw a big increase in diesel cars—particularly German automotive—the UK infrastructure for refineries was built mainly for petrol and relied heavily on diesel imports. This saw diesel go up somewhere around 30% relative to petrol prices rising only around 15%. Markets are pricing in two 0.25% interest rate increases from the BoE by year-end, which in effect could affect borrowing for new home buyers, leading to less demand, which could result in lower property valuations yet still higher mortgage repayments—which is not a great combination. Commodity Markets Oil
In commodities, oil is trading slightly lower than the end of last week despite not much of a resolution to the conflicts in the Middle East, with Arab oil infrastructure being the victim of that conflict once again.
The Strait of Hormuz, as a vital shipping lane, still remains a choke point for global oil markets—most of which goes to Asia, but still has a massive knock-on effect in a globalized economic world. There are rumors of the IRGC (Islamic Revolutionary Guard Corps) charging a toll for ships to pass through the famous waterway, where all the Arab countries' oil passes through, as well as Iran's.
The Red Sea could be the next issue, with Iranian-backed paramilitary groups making things complicated there. Markets are watching out for the upcoming OPEC+ meeting. Metals
Gold: Traded around $4,000 after a few months of a downturn following a good couple of years of a bull run driven by central bank buying, dollar weakness, and of course, retail speculation.
Silver: Slightly to the downside and not correlating with gold. Maybe the silver show is over, and retail making trading memes about it like crypto is well behind us.
Copper & Base Metals: Copper and certain other metals are up this week, being talked about mainly due to their demand from the tech and AI buildout.
Equities US Equities
US markets came up somewhat, with the S&P 500—the world's stock market benchmark—rising somewhat. The tech-heavy Nasdaq saw some volatility with a sell-off and then a dip-buy, with earnings from Big Tech Magnificent Seven companies bringing some confidence back into the AI trade. Eurozone
The UK, France, and Germany all saw quite positive buying this week. Possibly a rotation out of US tech and lower oil prices than last week could have helped to push that. Asia
Japan: Japan's benchmark stock index, the Nikkei 225, saw pressure after Japan possibly faces inflation issues after years of low inflation.
South Korea: The KOSPI saw massive volatility, almost like looking at price action on the Nasdaq. Korea's economy is heavily exposed to tech and semiconductors—massively influenced by Samsung and SK Hynix—and there are still talks about over-speculation and leverage.
Crypto
Bitcoin (BTC): Sitting at around $63,000 and seems to be going sideways, with not as much retail speculation or talks at the moment about the revolution of blockchain technology.
Ethereum (ETH): Trading at under $2,000—is that smart contract not looking so smart these days?
Ripple (XRP): Sitting at around $1, moving alongside them with little hype.
Solana (SOL): Sitting at around $73.
Altcoins: And did altcoin season even happen?
Forex
EUR/USD saw good buying this week after the Fed speech from Kevin Warsh caused dollar pressure, along with falling oil prices causing a further sell-off in the dollar.
THIS IS NOT INVESTMENT ADVISE