00:00Well, Fiona Zincotta is Senior Market Analyst at Stonex, a financial services firm.
00:04Super to have you on Global Business Europe again, Fiona.
00:06So, is this a textbook relief rally or something more sustained?
00:13Yes, I mean, this is a market that was desperate for good news regarding the conflict in the Middle East.
00:20So, the initial reaction has been very swift and it's been very strong.
00:25Whether it's sustainable or not will depend on a couple of factors.
00:30I think, first of all, whether the ceasefire is to be respected or not over these two weeks.
00:35Any signs that we're not seeing that ceasefire respected could quite quickly see the markets get a little bit nervous
00:40again.
00:41And we could start to see oil prices rise, stocks fall.
00:44Also, progress in negotiations towards a more longer lasting deal.
00:50And obviously, the focus is also going to remain very firmly on that Strait of Hormuz.
00:55And whether ships are actually transiting the waterway in order to be able to get oil and energy flowing again.
01:04Because that seems the real crux of this is those oil and energy prices.
01:08And money is moving back into U.S. Treasuries.
01:10Does that signal confidence or continued caution?
01:15Yeah, it seems to be that we are very much risk-on at the moment.
01:19We're seeing this big demand for U.S. Treasuries, which is bringing those Treasury yields lower.
01:25They had lifted quite significantly over the six weeks that this war had been going on.
01:32So, the fact that we are seeing those yields come down means those concerns over inflationary pressures are easing.
01:38And also, as far as the Federal Reserve is concerned, the markets return to around a 50-50 prospect of
01:45the Federal Reserve being able to cut rates again this year.
01:48So, that has been quite a significant repricing that we've seen lower.
01:53We've talked already a bit with our correspondent about Brent Crude being back under $100.
01:58But I wonder, what would you say that the key risk markets might be underestimating that's going on here?
02:07Yeah, so I think, you know, the key risk is whether we will get oil flowing to the extent that
02:13the market is expecting.
02:15I think there is obviously going to be complications with getting oil and energy flowing.
02:19There could be tolls. As far as pumping out oil again, it's going to take potentially quite a long time
02:26to get that ramped up again.
02:28And also, energy infrastructure. How hard has it been hit?
02:31That we still really don't know. And it might take quite some weeks to really understand that.
02:36So, I think that's still the focus. It's going to be very much on oil prices and on whether that
02:42oil is still flowing.
02:44Fiona St. Cotter, always a pleasure. Thank you very much.
02:46Fiona St. Cotter from Stonex.
02:47Thank you very much.
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