Andre Janse van Vuuren and Julien Ponthus
The Australian sharemarket is set for an unsteady start to the week as US President Donald Trump continued to threaten Iran even as talks began in Switzerland between his vice president and Iranian officials on next steps in the interim agreement signed last week to end the war.
As the meetings got underway on Sunday in Switzerland, Trump said in a social media post that he would strike Iran again if it doesnโt โimmediately stop their highly paid PROXIES in Lebanon from causing trouble.โ
It comes after Tehran claimed on the eve of the talks that it closed the Strait of Hormuz again over Israelโs ongoing military campaign in Lebanon against the Iranian-backed Hezbollah militant group. The immediate impact on Hormuz traffic was unclear, but even before the recent ceasefire, millions of barrels of oil had been quietly escaping the waterway each day.
Speaking on Sunday to Fox News, Trump said he told Iranian leaders directly that if they close the Strait of Hormuz, โYou wonโt even make it backโ to Iran, using an expletive. Trump has threatened to impose American tolls in the strait if a final deal with Iran isnโt reached in 60 days.
Futures for the Australian sharemarket are pointing to a dip of 16 points, or 0.2 per cent, at the open for the ASX, but they were set before the latest developments. There are fears of another rise in oil prices when crude resumes trading this morning.
While a hard-won interim deal has signalled a pause in US-Iran hostilities, Sundayโs discussions are likely just the start of protracted wrangling that will span topics including Iranโs nuclear capabilities and economic relief for Tehran.
With US cash markets closed for the Juneteenth holiday, S&P 500 futures declined after the benchmark posted its best week since the end of May. Europeโs Stoxx 600 dipped 0.2 per cent.
Brent crude rose 0.9 per cent to above $US80 a barrel, paring a 7.7 per cent drop for the week, but closed trading on Saturday (AEST). Oil will resume trading this morning.
The latest developments are a test to the optimism that has seen a technology-led rally in stocks gain further momentum after the US and Iran lifted a months-long dual blockade of the Strait of Hormuz late last week.
โOf course, with Trump there can always be some derailment along the way, but we believe that weโre set into a new phase of de-escalation,โ said Alexandre Drabowicz at Indosuez Wealth Management. He advised investors not to rush to conclusions about a permanent deal.
UK gilts led a broad advance in European bond yields after Greater Manchester Mayor Andy Burnham won a seat in Parliament, handing him a pathway to challenge Prime Minister Keir Starmer for his job. Investors are debating whether a Burnham premiership might shift to a looser fiscal policy.
The pound outperformed most major currencies, while the dollar held at its highest level since March. Bitcoin snapped a three-day losing streak. Gold headed for a third straight weekly loss, trading around $US4150 an ounce.
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