Oil down, expectations up

Today, glimmers have opened the oil market as Iran moves to allow some ships through the

street of our moves.

Plus reports circulate of Trump's 15-point plan to end the war, though it's still unclear

who he's talking to.

And business confidence slips in March as the energy shock unfolds.

This is Reuters Morning Bid bringing you unfiltered market news and analysis straight from the

Reuters newsroom seven days a week.

I'm Mike Dolan and London.

And I'm Anish Mansky.

It's Wednesday, March 25th.

Well, Mike, we're hearing a lot of news about this potential plan to end the war.

I believe it's a 15-point plan from Donald Trump.

But it's slightly unclear who exactly he's talking to.

It's a lot is unclear in this.

But again, as we spoke about yesterday, markets want to see some movement here.

There is a feeling that this will end at some point and there is a clear bias if you

like towards trading a possible ceasefire.

Now, whether that ends up from this plan or not, as you say, we don't know who the United

States is talking to.

But one thing they have latched onto in recent few hours of trade, at least the oil market

has seen Brent come down below $100 barrel again.

And that's basically on this Iranian statement to the United Nations that it will allow

some ships of non-combatant nations.

It says to pass through the straits of all moves, which is something it's indicated before.

But it gives some optimism that even if there is a prolonged negotiation or even a temporary

ceasefire, that's some oil flows through those straits.

I mean, I do think this is another example of the paper markets being a lot more optimistic

than what we're actually seeing on the ground in the physical markets because it's one

thing for Tehran to put out this statement.

It's quite another thing if you're a company to actually send your ship through to actually

pay the insurance to take the risk.

It's also unclear in terms of what is going to be considered a combatant.

What's going to be considered a line with the US?

What's not going to be considered a line with the US?

A lot of uncertainty here.

And again, it seems as though there's almost a positive bias as I think you were

noting early.

We usually talk about a negative bias, but where investors are really glomming on to

any news to say, okay, this is going to end.

This is going to get better.

We're going to go back to normal.

But I think there's a lot of reason to believe here that we're not getting back to prewar

any time soon.

Yeah.

I think that uncertainty is clearly going to linger for a long time.

If this 15 point plan that is in many reports this morning includes a one month ceasefire

which part of those reports then that puts us in a different territory.

But the missiles are still flying and certainly the direct conflict between Iran and Israel

is still as hot as it has been.

So even the United States itself were to talk of ceasefire for a period.

It's not clear those two countries will cease any hostilities.

And also in the background, there is these reports of US troops being on the way to

the Gulf for what reason we can only speculate.

Exactly.

And you know, I think one thing that does seem relatively clear is that this conflict is

not necessarily very popular with the United States.

And we're seeing this in Trump's approval ratings.

Yeah.

We've got the latest Reuters, Ipsar's poll, which is a rolling opinion poll on the president's

approval.

You know, his overall approval is down to 36%.

That's the lowest of his second term in office.

And very significantly his economic policy approval rating, which obviously will take in

cost of living issues, which are very top of his agenda this year.

That's fallen to just 29% now.

That's the lowest Trump has had in either of his presidency's and it's actually lower

than Joe Biden did in the previous four years.

So again, that definitely somewhat explains why Trump probably does want to take a breather,

does want to figure out exactly what the next step is.

But as you said, we're getting conflicting signals on the ground.

We're getting conflicting messages.

But it is remarkable that both what they were talking about, US equities, or even whether

you're talking about the crude markets, it seems like investors are really looking for

the positive and somewhat disregarding the uncertainty and the negativity.

Yeah.

I think the positivity, if we call it that, is really around this idea that the politics

of this for Washington, at least, will dictate that it will end soon.

And if you're certainly trading the market, whatever about invested broadly in it,

then clearly you're looking for that moment to see how far could oil fall in the moment

when it all ends, where will we be in six months' time?

What are the other themes in the background, anything from AI to all the other aspects

that were building a head esteem in the economy before this actually happened?

Well, we're also getting some news about what businesses are thinking about everything

that's going on.

We got some business survey data in yesterday.

And on the one hand, it's relatively negative as one would anticipate.

But there are also some slightly positive or slightly less negative than expected findings

from these surveys.

Yeah.

Well, these were what were keenly, because I think as we mentioned yesterday, a lot of

the hard data now is effectively out of date, because it's going to be a while before

we get any sort of real numbers from March.

But the readings were low, as you say, business confidence has been hit, particularly in

Europe, where I think overall for the economy at large, it's now falling to stall speed.

I think we can say if you were to take a reading from that.

But interestingly, manufacturers who you think would have had the biggest hit from an energy

shock actually did okay.

It was mostly in the service sector, which suggests that maybe households rather than factories

are where the initial shock is being felt most.

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For today's recommended read, check out Mike's column and how the war in the Middle East

is rattling petrodollar foundations.

The link is in the show notes.

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