Shane Solly: Harbour Asset Management expert on the market reactions to the third week of the Iran conflict

Shane Solly Harbour asset management is with us. Hi Shane. Hello Heather. All right, so we've got

um third week of the conflict starting now. Got the oil prices sitting above a hundred bucks

a barrel. How have the investment markets reacted and what about the local markets?

Yeah, we've seen more de-resking, uh, a couple of different ways we can see that their long-term

bond rates, which are driven by inflation concerns and risk premiums going up. There are about

0.3 percent. So US 10 year government bonds, 4.3 percent. Locally, we're about 4.7 percent.

That takes us right back to where we were a year ago. So that's a bit of a hurdle in terms of

borrowing. Our share market, we've seen the US share market down, was down again on Friday night,

about 0.65 percent, um, down 3.6 percent since the around action started. We're locally, we're

down about 4. And we're seeing a sector level of things like energy, utilities, consumer

stable, is they're doing okay? The ones that are weaker, industrial, materials, consumer

discretionary. Can the markets settle down? Do you think if the conflict continues?

Uh, um, we might continue to see a bit of de-resking until we understand the scope and the

breadth of the action. If we look back at what happened with the Russian invasion of Ukraine,

we saw this early on shock. And then it took us a little while to stabilise as we understood

the scope of the actions and really understand what it meant to supply chains. Um, but, you know,

while US and Iran are looking for our fronts, the new term is this balance between opening up

the straits or mayors and the risk of internationalization. So yeah, what's going on there?

And so the markets today, a bit of a week start, but they started to trade a little bit better.

What happened? Yeah, you've been on it. We started with a really week start. The

Brent oil price rose 3.3 percent on the open, hitting about 106, 50, 106 US, 58 barrel.

After this cave island, um, a bombing by the, uh, military service by the US. And then it's

full and back over the day. It's around 104, 105 right now. The Iranian foreign minister,

I got a ratchet. I'm not going to get his name right here this whole either. Um, come out and say

that, hey, look, the straits are only close to our enemies. It's opened to the good guys. Mr.

Trump's, you know, they're staring things up. He's saying, you know, around really wants to do a deal

with it. Um, but he's prepared to hit Carl Island again. And he's going to delay his sum up

with Chinese presidency. If Mr. G doesn't send ships to help out in the Gulf as well. So we actually

saw the museum and she made that down about 0.2 percent. Not a hell of a lot today. I like training.

It was down about 0.5 percent one stage. As we speak, we're actually seeing the US futures market.

This is the indication of what might be out about 0.5 percent in European, um,

futures of about 0.3 percent. So the market's trying to read through it and say we might have seen

the worst. Yeah, interesting. Hey, thank you very much, Shane. As always, we'll talk to you next week.

Shane Sully, harbor asset management.