Why Trump stance on Iran is a market mover

European equity markets are playing a waiting game ahead of President Trump’s announcement on Iran today.

Oil prices have risen inexorably over recent weeks as the market has anticipated a decision by President Trump to abandon the anti-nuclear deal agreed between the west and Iran.

Everyone has known for months that Trump was adamantly opposed to the deal, but now we will at last discover whether he is prepared to abandon multilateral western diplomacy in favour of a return to unilateral US sanctions.

However, while oil is the focus of attention for markets, the prospect of increasing tensions in the region should President Trump follow through on his threats is also a concern, not least in terms of what Tehran might do in a region already beset by political risks.

ETFS Brent 1-month GBP (LSE:OLBP)

Source: Trading View                        Past performance is not a guide to future performance

The steady inflow of funds into emerging markets appears to be coming to a dramatic halt, which has seen significant falls in currencies from Argentina to Mexico and beyond.

The double effect of US yields beginning to rise alongside cracks beginning to show in these emerging markets is exacerbating the impact.

As US rates rise, investors are beginning to repatriate funds back to the US and this is choking off the supply of abundant liquidity that had been provided to emerging markets by western investors.

Heightened political concerns ahead of elections in a number of key emerging markets are also leading investors to reassess their asset allocation to emerging markets and choosing to move into safer assets.

William Hill (WMH)’s share price has dropped sharply in the past two weeks amid fears that the imminent government fixed odds betting terminal decision will come down on the side of consumer caution and a £2 maximum stake.

The company, which earned 54% of its group revenue from retail in 2017, is one of the most exposed to this decision, but is trying to shift its focus more online and a better than expected trading update this morning has seen online net revenue rise by 12% year on year, giving the share price a temporary reprieve.

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