Weekly house view | From wildcard to reality
The week in review
After a full week of the Iran war, the wildcard scenario of the Strait of Hormuz being effectively closed is now a reality. Last week, just a handful of ships managed to cross the Strait, through which about 20% of global crude oil—and 4.5% of world trade—usually passes. Brent crude oil prices rose 28% from the prior week, the biggest jump in five years, and US gasoline prices hit their highest since September 2024. Iran’s top clerics chose Mojtaba Khamenei, son of the slain supreme leader, as his father’s successor, signalling that Tehran is likely to stick to its uncompromising stance towards the US. President Trump demanded unconditional surrender. Both sides need to have the willingness to de-escalate for a resolution.
The US economy is resilient and healthy, the Federal Reserve’s latest ‘Beige Book’ report showed. This picture was reinforced by expansion readings in the latest ISM services and manufacturing reports. Nonfarm payrolls turned negative in February, marking the third negative payroll month in five months, though private sector employment growth (ex-strikes) is still healthy year-to-date.
The S&P 5001, which ended the fourth quarter with 9.1% revenue growth and 14.1% year-on-year growth in earnings per share (EPS), fell 2% last week (in USD).
In China, the government announced a target of 4.5-5.0% annual growth, the lowest since 1991.
Quote of the week
Chinese Premier Li Qiang said Beijing aims to “steer general price levels back into positive territory and produce a reasonable, modest rebound in consumer prices to facilitate a virtuous cycle in the economy”.
Key data
The US economy unexpectedly lost jobs in February and the unemployment rate increased to 4.4% from 4.3% in January. Nonfarm payrolls decreased by 92,000 jobs after a downwardly revised 126,000 increase in January. US manufacturing expanded in February, but input prices soared at the fastest pace since 2022.
In the Euro area, inflation unexpectedly quickened, with consumer prices rising 1.9% from a year ago in February, up from 1.7% in January. Core inflation—excluding volatile food and energy costs—accelerated to 2.4%.
