Dear Friends,
Having after the Islamabad Peace Talks failed and after the US reactions on halt the passage of Strait of Hormuz and the blockage of Iran harbours, US lacks of co-operations from its allies.
Amidst this massive global geopolitical shifts, we are currently witnessing the classic market strategy of "Buy the Rumor, Sell the News" playing out. The "War Premium" the fear of conflict that has prevailed in the market this morning is now rapidly dissipating.
Here is an explanation of what is currently unfolding in the market:
1. "The Islamabad Pivot"
This morning, news regarding failed negotiations and blockades dominated the headlines. However, according to the latest reports emerging from Islamabad, while a comprehensive agreement has not yet been reached, the doors for negotiation remain open.
2. The Market's Perception
The market has realised that a full-scale naval conflict is unlikely to erupt anytime soon.
There is a price cool that we see in the Crude oil too. It is trading <100 USD. These prices plummeted rapidly as traders engaged widely in profit-booking.
Equities (Gift Nifty: +225 points): The recovery of approximately 450 points in the Gift Nifty from its morning lows constitutes a "Relief Rally." Traders believe that the ceasefire will continue in one form or another.
3. Gold and Silver Recovery
Gold and silver prices initially declined due to the appreciation of the US dollar. Now that war tensions have subsided slightly, the value of the dollar has also eased. This widely helped gold and silver prices to make a recovery.
My Prediction:
As we expected, this appears to be a classic "Pump and Dump" Trump pattern executed during Asian market hours. Large institutions manipulate these prices by driving them up based on news headlines. This only to subsequently drive them down by offering alternative explanations, thereby accumulating profits.
Barring the emergence of any new tweets overnight from the US President and the trajectory of the markets are likely to remain neutral to positive the day after tomorrow.
Let's do wait and watch the situation!
