My market analysis amid current geopolitical shocks

The trading week is ending with a fair amount of ambient tension. Iran is slamming the door on its uranium, oil is getting restless, and stock market indexes are giving us a rollercoaster ride. Honestly, this is the kind of setup that makes charts unpredictable. And that’s exactly why you have to keep a cool head. In this article, I break down the stakes for the end of the week. We’ll talk about Nvidia and the major decisions scheduled for this weekend.

The dynamics driving our indexes

To put it simply, there are mainly three elements to keep an eye on today.

1. Digesting Nvidia’s results: The numbers are excellent, but not exceptional. Asia loved it, propelling the Nikkei in Tokyo. On the other hand, the United States didn’t really jump for joy.
2. The infernal triangle (Iran, Oil, Rates): This is the basic mechanism right now. Iran makes an announcement about the Strait of Hormuz. As a result, the price of oil climbs toward $104. And since oil is everywhere, inflation goes up. In short, this pushes US rates (bond yields) to remain very high, around 4.60%.
3. Indexes in high spirits: The Dow Jones is doing great, soaring above 50,000 points. The CAC 40 crosses the 8,000-point mark, a very nice signal. In fact, the markets sense that we are getting closer to a potential diplomatic agreement.

The historical anecdote: making a fortune in the shadows

To illustrate how geopolitics creates opportunities, let’s take a leap back in time. In 1979, during the Iranian revolution, a young trader named Mark Rich smelled a goldmine. He clandestinely bought Iranian crude. Then, he sold it back to the whole world despite the embargo at the time.

These risky moves allowed him to build Glencore. It’s one of the largest commodity trading houses in the world. By the way, the greatest fortunes are often born in these gray areas of history, where others hesitate.

Watch out for last-minute surprises

However, I’d rather slip you a little warning. History proves that decisive announcements always drop on the weekend. This is simply because the stock markets are closed.

Donald Trump might just take advantage of this weekend to force a deal without hurting the markets. We also note the presence of the Pakistani army chief in Iran. That’s a strong sign. Honestly, Donald Trump often yells loudly, but he doesn’t like war. He avoids it even to preserve his karma, based on my impression. His goal remains to strategically make his opponents fold.

Conclusion

In summary, the stock market dynamic is positive but rests on a fragile geopolitical balance. Smaller indexes like the Russell 2000 (American small caps) are finally breathing. On the other hand, let’s stay very cautious. Volatility will likely show up on Monday at the open. Actually, I have to let you go, I’m already a bit late to join my students live. Take care and stay curious!

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