Post by SWAN Capital Solutions

𝗜𝗙 𝗗𝗜𝗣𝗟𝗢𝗠𝗔𝗖𝗬 𝗗𝗢𝗘𝗦 𝗡𝗢𝗧 𝗘𝗡𝗗 𝗧𝗛𝗜𝗦 𝗪𝗔𝗥, 𝗧𝗛𝗘𝗡 𝗠𝗔𝗥𝗞𝗘𝗧𝗦 𝗔𝗥𝗘 𝗦𝗧𝗔𝗥𝗧𝗜𝗡𝗚 𝗧𝗢 The disruption of energy supply through the Strait of Hormuz underscored Asia’s predominant vulnerability, followed by Europe, and to a lesser extent the Americas. De facto, the widening dispersion in market performance lies in the distinction between economies being an energy importer and exporter. China and India, for instance, despite their high exposure, demonstrate a degree of insulation that extends beyond strategic petroleum reserves or discounted Russian crude import deals. Their resilience is rooted in a combination of structural, strategic, and policy-related factors that mitigate immediate vulnerability, though do not eliminate it. For example, both economies have sought to reduce exposure to the US dollar over the years and have used their respective currencies or barter-like arrangements in trade, reducing financial channels to Western sanctions. Geopolitical strategies argue that Israel-Lebanon was never more than a “periphery” risk. As long as the US does not renew its attack on Iran, and Iran does not attack US forces in the area, the ceasefire remains in effect. This gave equities reason to surge, with the S&P 500 jumping 2.5% and closing above both its 50- and 200-day moving averages. Sector-wise, everything rose except for Energy, which dropped by 3.7% following a historic 14.6% decline in WTI crude oil prices. Gold, silver, and copper were all higher, and Bitcoin topped $71K. This ceasefire should provide further comfort to stocks over the coming days. However, there remains a significant gap between what both sides claim they agreed to, suggesting that implementation may be challenging.  U.S.-Iran negotiations have collapsed for now, but we view the talks as evidence of an economic incentive to end the conflict.