It don’t matter the context and it certainly don’t matter the veracity of the comment. In this market, it seems that what matters is just the who. And when Trump says something, markets move. In the latest episode, his comment about the US being in the “final stages of talks” with Iran was enough to turn the tide in risk sentiment yesterday.
The overall market mood was more tepid and cautious all through this week, but there were some steadier hands yesterday. And dip buyers were rewarded with Trump delivering another positive headline, even if there wasn’t much backing to it. Coincidence? I don’t want to be one to say but it wouldn’t be the first time.
As for Trump’s remarks, it is once again very on-brand of him to stick with this script. He has been delivering countless positive remarks in trying to gas up the stock market. And he has gone and done that once again, with markets continuing to lap it all up. Yet, here we are on Day 83 of the war and still without much progress. There’s a certain the boy who cried wolf feel with this whole thing but who are we to judge what markets will do.
US stocks had been poised for a weekly loss but have now turned positive on the week. After the close yesterday, Nvidia delivered earnings and that was another main focus point. While the chip giant delivered a beat on expectations, it may not necessarily be enough. As mentioned before, nothing less than perfect is expected for Nvidia these days.
While data center strength remains the biggest driver, the scope for error and delivering on expectations is expected to narrow further moving forward. And that is arguably what investors are nervous about.
Rising costs, geopolitical uncertainty, and overreliance on data center demand present major headwinds for Nvidia to keep delivering moving forward. And as investors are also growing more nervous about the AI landscape in general, there will be growing skepticism on how long can Nvidia continue to deliver on the lofty expectations set out by the market.
Okay, enough with the sidetracking. Now, let’s circle back to Trump and the headline that changed things yesterday.
The full context of Trump’s remarks is he said that the US is now negotiating with “far more reasonable” officials from Iran. There’s no firm evidence on how talks are progressing to the “final stages” yet. On Iran’s side, all they have confirmed is that they have received a new proposal by the US and are examining it. So again, it takes two to tango but only one side is claiming to move for now.
While Trump did prop up markets with the positive headline, he also did warn that he is in no hurry to force a deal that would be subpar. And vice president Vance also warned Iran that the US is “locked and loaded” to resume strikes if need be.
And Iran has also responded that they will escalate the war to “beyond the region” if the US resumes active military bombardment.
So, make what you will of the actual matter at hand.
What about the Strait of Hormuz though?
Well, shipping data continues to show that traffic remains at a near standstill.
While Iran claims that there were 26 vessels that moved on Monday, independent analytics show that only around 10 ships crossed the waterway during that period. This traffic mostly consisted of smaller cargo ships, a chemical tanker, and a few supertankers (including Chinese vessels and a South Korean oil tanker) that had been stranded and waiting in the Gulf region for weeks.
In essence, nothing has really changed in this regard. And even if the number were to be closer to the claimed 26 vessels by Iran, it still represents a small trickle rather than a flow in terms of traffic resumption along the strait.
We’re now nearly 12 weeks into the closure of the waterway, in case anyone is counting.
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