Weekly house view | In limbo
The week in review
The Iran situation is in limbo after President Donald Trump cancelled a trip by US envoys to Pakistan for talks aimed at resolving the standoff. Trump extended the truce indefinitely but maintained the blockade of the Strait of Hormuz. The economic impact of the Strait’s closure is reverberating around the world: Malawi sold gold from its reserves to pay for fuel imports, United Airlines slashed its profit forecast as jet fuel prices surge, and tour operator TUI suspended revenue guidance.
The S&P 5001 rose 0.5% to an all-time closing high, helped by tech stocks. In a milestone week for innovation, Chinese group CATL developed an electric vehicle battery with a six-minute recharge time and a 1,000 km range, and a humanoid robot broke the human half marathon world record.
In the US, the Department of Justice dropped its criminal investigation into Federal Reserve Chairman Jerome Powell, in a breakthrough that could pave the way for the Senate to confirm Kevin Warsh as the next head of the Fed. Warsh’s main ideas centre on leveraging AI-driven productivity gains to justify lower interest rates while reducing the Fed's balance sheet. Warsh does not believe in forward guidance.
Quote of the week
Indonesia’s Finance Minister Purbaya Yudhi Sadewa floated the idea of imposing a levy on vessels transiting the Malacca Strait: “If we split it three ways between Indonesia, Malaysia and Singapore, that could be quite something, right?” He later said Indonesia had no such plans.
Key data
Control group US retail sales rose 0.7% in March, beating expectations for a 0.2% increase. The US consumer seems immune to theIran conflict.
The S&P Global Flash Eurozone Composite PMI fell to 48.6 in April from 50.7 in March, ending a 15-month sequence of growth.
