Blockade Threats Rattle Markets as Earnings Season Starts

Group of fund manager analyzing big data for future investment

Over the weekend, peace talks between the US and Iran collapsed and were replaced by threats of President Trump of a Persian Gulf blockade, which sparked a selloff in index futures and a rally in oil prices overnight. US military officials have since clarified this to a blockade against ships sailing to or from Iranian ports. Stocks have bounced up off of overnight lows, while the oil price remains elevated.

US index futures are down 0.6%-1.0% to start the week, while in Europe, the DAX is down 1.1% and the FTSE is down 0.4%. Metals are sliding this morning with Copper down 0.2% and Gold down 1.1%.

Energy prices are up today. US and Brent Crude are both up about 7.5%, trading in the $102.50/bbl to $104.50/bbl range. Gasoline is up 4.2% trading back above $3.00/gallon.

For the last six weeks, the Iran War has dominated business news. That starts to change today as earnings season has gotten underway with Goldman Sachs handily beating street estimates ($17.55 vs Street $16.49), although its shares are down 4.4% in premarket trading. Over the next several weeks a steady stream of numbers may give an indication of the impact the war has had on the global economy to date and on the outlook going forward.

Other companies reporting results this week include JPMorgan Chase, Wells Fargo and J&J on Tuesday, Bank of America and Morgan Stanley on Wednesday, and Netflix plus Alcoa* on Thursday. There are no major earnings reports in Canada this week. 

*Shares of Alcoa are held in some portfolios managed by SIA Wealth Management.

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