Middle East war, on-off. Stock markets, on. Sir Keir Starmer, off?

An excerpt and link to our weekly market overview from Quilter Cheviot

By Richard Carter, Head of Fixed Interest Research

Market overview

Another week, another dose of ‘on-off’ news flow coming out of the Middle East conflict. At the beginning of the week, the war was very much ‘on’. The US had launched Operation Project Freedom, its latest effort to enable merchant ships to pass safely through the Strait of Hormuz. Iran threatened to retaliate and oil prices traded at the higher end of the range seen so far during the conflict. Fast forward to the end of the week, Operation Project Freedom had been put on hold. Iran was considering another peace plan and oil prices had fallen back towards US$100. War in ‘off’ mode once more.  But not for long. Iran put forward a counterproposal during the weekend which US President Trump dismissed as totally unacceptable. Back to where we started then with the war in ‘on’ mode.  

A faulty on-off switch

Press the ‘on-off’ switch on a TV remote too many times and chances are it will eventually break. Is the same true with the Middle East conflict— a case of too much ‘on-off’ news flow desensitising markets? For even though there appears to be no end in sight to the conflict with all the negative implications this has for inflation and economic growth around the world, global stock markets continued to advance. US markets went on to set new all-time highs which begs the question, if stock markets are becoming desensitised to news flow surrounding the war, what is taking its place?

The value of your investments and the income from them can fall and you may not recover what you invested.