Today the tone on the financial markets is very different from the way the week started. The fears of an outright war between the United States and Iran have declined and investors are once again opening up to higher-risk assets.
It has been about a week since the United States military took down Iran’s chief general Soleimani. In response, this week Iran attacked a US army base in Iraq. But instead of provoking yet another strike from the US, it seems that the Iranian missile attack was the end of it, at least for now. Donald Trump announced that he will not be ordering any further military actions against Iran, and will instead impose stricter sanctions on the Middle-Eastern country.
With war away from their mind for now, investors are feeding off of the optimism of the US and China being close to concluding their first trade agreement. It will be signed on January 15, hopefully putting the world’s two largest economies in a good position to continue working together towards a more comprehensive agreement to end their trade war fully.
The big losers whenever risk appetite is higher are, as usual, the Japanese yen, the Swiss franc, and gold, which have all decreased in value. Oil has dropped too, amid higher supplies in the US, and the relative stability in the Middle East at the moment.
Instead, today we expect to see growth in the Australian and New Zealand dollars, as well as consistently on all stock markets around the globe.
