Étienne Girard
Despite rising geopolitical tensions in the Middle East on Tuesday, which led to a minor sell-off in risk assets, market sentiment overall remains optimistic, according to analysts from QCP Capital. They suggested that while Middle Eastern conflicts might dominate headlines temporarily, the limited market reaction indicates sustained interest in risk assets, noting that the “shallow” sell-off is unlikely to overshadow broader trends.
In their Wednesday report, QCP Capital highlighted that the market’s risk-averse response to Iran’s missile attack on Israel was relatively contained. The S&P 500 closed down by just 1%, and U.S. crude oil (West Texas Intermediate) prices increased by 2%. Bitcoin also dropped by around 5% but found support near $60,000. However, the analysts cautioned that any further escalation in the conflict could push Bitcoin’s price down further, potentially reaching $55,000.
The report also drew comparisons between China’s current economic policies and Japan’s strategies during the 1990s. During that period, Japan introduced rate cuts, negative interest rates, and quantitative easing to tackle deflation—policies that are now being mirrored by China.
QCP Capital suggested that China’s recent economic stimulus could bolster risk assets, including cryptocurrencies. “The liquidity injection from the People’s Bank of China, along with potential fiscal support, will likely lift asset prices domestically and may have a positive global spillover effect, including in the crypto markets,” the analysts said.
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Supportive comments from Fed Chair Powell
The report also pointed to recent remarks by U.S. Federal Reserve Chair Jerome Powell, which hinted at the possibility of further interest rate cuts in 2024. During his speech at the National Association for Business Economics on Monday, Powell’s dovish tone suggested a favorable outlook for asset prices. “We expect that asset prices will continue to be supported as both the Federal Reserve and the People’s Bank of China move into more aggressive rate-cutting cycles,” the report noted.
In the past 24 hours, Bitcoin’s price has fallen by approximately 4%, trading at around $60,900, according to data from PRIME’s Bitcoin Price Page.
Meanwhile, in the UK, companies like Shell, BP, and BAE Systems led gains on the FTSE 100, contributing to a slight rise of 0.05% in the London-based index. Analysts foresee possible disruptions in oil supplies, driving Brent crude futures—an international oil benchmark—up by about 2.5%.
Global markets posted mixed results. Japan’s Nikkei 225 dropped 2%, the Stoxx Europe 600 inched upward, and Hong Kong’s Hang Seng Index surged over 6%. Mainland China markets remained closed for a holiday. In the U.S., stock futures declined as investors weighed the escalating tensions in the Middle East and anticipated potential retaliatory actions from Israel following Iran’s missile attack.
