All major U.S. benchmarks are firmly higher this morning. Price action chopped around and consolidated through much of yesterday’s session ahead of President Trump’s decision on the Iran Nuclear Deal. His plan to not renew the deal was well-assumed prior to the official announcement.
U.S stocks ended mixed on the news while oil prices fluctuated in each direction, as investors considered the potential negative ramifications of Trump’s decision. The U.S President adopted a very aggressive rhetoric during the announcement and failed to hold back from his view that the 2015 agreement was “defective” at its core.
Crude prices are going nuclear as President Donald Trump pulled out of the Iranian nuclear accord creating a new risk dynamic for global oil markets. The decision by president Trump to pull the plug on what he said was a horrible deal comes as global oil demand is rising and the lack of investment in the oil patch is making it difficult for global oil production to keep pace with demand.
The S&P 500 is lower this morning after yesterday’s momentum shift. Price action slipped from unchanged at 2:15 a.m. Central, right as Fed Chair Powell spoke at a forum in Switzerland. It is Decision Day. Yesterday, just as crude oil settled above $70 per barrel and at the highest level since November 2014, President Trump tweeted he will announce his decision on the Iran Nuclear Deal today at 1:00 p.m. Central.
Crude oil prices surged closing at above $70 a barrel for the first time in three-and-a-half years, only to have a nuclear meltdown in aftermarket trading. WTI further set a record 2.7 million contracts of open interest but fell hard after President Donald Trump tweeted that he would announce his decision on the Iran nuclear deal on May 8, 2 p.m. Eastern.
Since January I’ve been bearish and I’ve been right. To possibly have to change that bias now could become a pride issue. Am I and those like me to prideful in our views to admit the possibility the market can go back into a sustained rally. Let’s look at the readings. For three months I’ve shown you the Dow vibrations, today we are looking at the SPX. In the SPX we had a 340-point first leg drop. What has that given us? It is the vibrational foundation for the next two lows.
Persistent fears that President Donald Trump will pull out of the Iran nuclear deal later this week have played a pivotal role behind the price of U.S. crude oil rising above $70 for the first time since November 2014 during early morning trading.
U.S. equities rallied sharply at the end of last week as did the dollar, despite the NFP disappointment. The headline number for the rise in jobs came short of analysts’ expectations, “164K vs. 193K forecast,” but the previous month’s figure was revised up by 32,000. Average hourly earnings also came in below expectations, growing by 2.6% YoY. The bright spot was the unemployment rate which dropped to an 18-year low at 3.9%.