/ 10 January 2020

Trump has markets on tweeterhooks

The markets fluctuated after US President Donald Trump last week ordered the killing of Iran’s top military commander Qassem Soleimani.
United States President Donald Trump. (Qassem Soleimani)



With the realisation that World War III is delayed, at least for now and until the next tweet, global markets have stabilised after US President Donald Trump’s televised address on Wednesday.

Iran “appears to be standing down”, Trump said at the White House. Trump was speaking after Iran retaliated, firing more than 20 ballistic missiles at two military bases in Iraq where United States troops are stationed.

Trump said the Iranian strikes did not harm any Americans, and the damage was minimal. He said the act showed that Iran does not want to carry on with the dispute.

The markets fluctuated after Trump last week ordered the killing of Iran’s top military commander Qassem Soleimani.

On Wednesday, gold rose as much as 2.4% to a six-year high at $1.610. Gold’s gains reflect the demand for safe-haven assets amid the global unrest, said Lester Davids trading desk analyst at Unum Capital, a financial services provider. But after Trump’s White House address the metal declined by 1.70%.

After the address, brent crude oil steadied at $65.41 per barrel after it had risen to $71.75, the highest since mid-September 2019.

The rand strengthened during the December holidays to R13.96 against the dollar, but weakened to R14.37 against the dollar after Soleimani was killed. On Thursday the rand had weakened to R14.15.

A weak rand is a concern and leaves little room for the Reserve Bank to cut interest rates, said Michael Treherne, portfolio manager at Vestact.

Treherne said that with persistent low inflation, the chances of a rate cut looked good, but the spike in the oil price and the weakening rand over the last week, could put a spanner in the works.

Economists have been calling for an interest rate cut to bolster the country’s weak economy, but the Reserve Bank’s monetary policy committee voted at its last meeting to keep it unchanged at 6.5%.

On Thursday, Hong Kong’s Hang Seng and Shanghai blue chips each added more than 1%, whereas Japanese stocks gained 2%. European markets reacted positively too. Germany’s DAX went up by 0.9% and London’s FTSE 100 went up by 0.5%

After the missile attack by Iran, Aljazeera reported that its supreme leader, Ali Khamenei said in Tehran that “the corrupt presence of the US in the region should come to an end”, calling its missile attack a “slap in the face” of the US.

Trump said Soleimani was a “ruthless terrorist” who was planning new attacks on American targets and that is why he was killed.

“Soleimani’s hands were drenched in both American and Iranian blood. He should have been terminated long ago. By removing Soleimani, we have sent a powerful message to terrorists: if you value your own life, you will not threaten the lives of our people,” he said.

Trump said his administration will not tolerate terrorism, adding the US would immediately impose new powerful sanctions until “Iran changes its behaviour”.

Tshegofatso Mathe is an Adamela Trust business reporter at the Mail & Guardian