Aleksandra Jensen @RainbirdFx: "Good afternoon, ladies and gentlemen Markets..."

Denmark

Good afternoon, ladies and gentlemen Markets are currently trying to navigate a rather uncomfortable mix of geopolitics, energy risk and policy uncertainty. The situation around the Middle East remains the key driver, and the big question right now is energy. Even without a formal blockade, the mere threat around the Strait of Hormuz is enough to disrupt markets. Ships don’t need to be physically stopped. If insurers become nervous or vessels are targeted occasionally, traffic slows down and suddenly supply fears start dominating the oil market. We briefly saw oil pull back after signals that the U.S. might try to stabilize the market, but that move didn’t last long. The fundamental issue hasn’t changed. As long as shipping through Hormuz remains uncertain, energy prices will stay a major risk factor. And that matters for markets because higher oil quickly translates into higher inflation expectations. If energy prices keep rising, the Fed’s room to cut rates becomes much smaller, even if parts of the economy start slowing down. In other words, geopolitics could indirectly tighten financial conditions again. At the same time the geopolitical picture is becoming more complex. China is reportedly trying to secure safe shipping for its own fleet, while Gulf states are carefully balancing their economic relationships with both the West and Asia. The longer this uncertainty lasts, the more pressure it could create on global trade flows and investment. On the equity side we are also seeing some cracks appear. Semiconductor stocks were under pressure after reports that the U.S. administration may tighten approval processes for chip exports abroad. That could affect companies like $NVDA (NVIDIA Corporation) and $AMD (Advanced Micro Devices Inc) and potentially slow parts of the global AI supply chain. Meanwhile parts of the tech sector are dealing with their own challenges. Massive investments in AI infrastructure and data centers are becoming expensive, and some companies are starting to tighten their cost structures again. Today’s key event will therefore be the U.S. labor market report. In the current environment markets actually prefer solid economic data. A strong number would signal that the economy can handle the geopolitical uncertainty. A weak number, on the other hand, could raise concerns about slowing growth at a time when inflation risks from energy are already rising. From a technical perspective the market is also sitting at an important point. The $NSDQ100 is currently hovering around 24,900 and trying hard to keep its footing, while the $SPX500 is fighting to stay above the 6,800 level. Both indices are essentially in stabilization mode right now. If buyers manage to defend these levels, the market could calm down somewhat. If they break, volatility could increase quickly. Clear & Simple Recap Here’s the short version. The biggest risk for markets right now is energy prices. Because of tensions in the Middle East, shipping through the Strait of Hormuz has become uncertain. Even the threat of attacks can slow traffic and push oil prices higher. Higher oil → higher inflation → harder for the Fed to cut interest rates. That’s why markets are watching this situation very closely. At the same time some tech stocks came under pressure after reports that the U.S. might tighten rules for exporting advanced chips abroad, which could affect companies like Nvidia and AMD. Today we also get important U.S. jobs data, which could influence market sentiment in the short term. Technically the market is sitting right on key levels: Nasdaq trying to hold 24,900 S&P 500 fighting to stay above 6,800 If these levels hold, markets may stabilize. If they break, volatility could pick up again. I wish you all a nice and profitable end of the week and a lovely and relaxing weekend to follow.. A www.breakingthenews.net/Article/US-futures-flat-as-Iran-war-continues/65818541