Wall Street has jumped on what could be a classic TACO play from President Donald Trump. If unconfirmed reports that the Iranian President is open to ending the war, then there could be an end to these challenging and worrying times.
Two big news stories hit the news today. The first is that even though it’s April Fool’s Day and a number of changes are visiting us today (which, I promise you, I won’t joke about), the bigger story is that Wall Street has jumped on what could be a classic TACO play from President Donald Trump.
Of course, TACO stands for Trump Always Chickens Out, which is exactly what stock markets have been hoping for. This belief that a ‘TACO’ is on the menu for investors exposed to stocks, gold, bitcoin, currencies and even bonds, is the reason why all four big US share market indexes are up over 2% before the end of trade at 4pm in New York City.
And the positivity is spreading globally, with our market expected to open 105 points higher at the start of trading at 10am AEST.
However, because it’s April 1 and Donald Trump is such an unusual President, you do have to hope this is not a huge April Fool’s Day trick! Not even Trump could do that, could he?
The news that sparked this optimism for the Dow Jones index and other market indicators was captured by CNBC with the the following: “The index had briefly surged above 1,100 points during the session after an unconfirmed report said Iranian President Masoud Pezeshkian was open to ending the war with guarantees”.
The only concern with this is that this guy has said something like this before. “To be sure, Pezeshkian made similar remarks earlier this month, saying in a post on X that the ‘only way to end this war — ignited by the Zionist regime & US — is recognizing Iran’s legitimate rights, payment of reparations, and firm int’l guarantees against future aggression’.”
Clearly, Iran will want to secure something in peace negotiations, apart from the promise of no more bombs, death and destruction for its people and property. But at least for today, financial markets are able to tone down the uncertainty that has taken stock markets close to and even into correction territory, meaning an index slide of 10% or more.
Our market is down 7.8% since we hit an all-time high on the S&P/ASX 200 index of 9200.9 that captures the stock price movements of our top 200 companies listed on our share market. An end to the war is likely to be good for inflation, interest rates, gold, bitcoin, resource stocks and exchange traded funds (ETFs) that capture overall market index movements.
S&P/ASX 200
All we have to hope for is that a workable peace plan is achievable between Donald Trump and the cleric leaders of Iran. Clearly, if it’s not, today’s market positivity could disappear overnight.
Undoubtedly, peace has to bring lower oil and petrol prices ASAP and a belief that the Iranian command over the Strait of Hormuz is no longer a threat to oil prices and the health of the global economy.
These reports of the Iranian leadership being up for peace talks follow the Wall Street Journal revealing that the President told aides he could end the war, even if the Strait remained closed. Meanwhile, The New York Post carried a story that the President said he expected the war would end soon.
The only problem is the reliability of a Trump throw-away line, which he uses for negotiation, and I guess even for face-saving reasons. However, we’re only at stage one of turning around market and economic sentiment, as Eric Diton from the US financial group The Wealth Alliance explained to CNBC: “Any steps toward ending the war overall, the stock market likes, and so, you are getting that relief rally, but no, we’re not out of the woods. The bottom line is, if we haven’t solved the oil problem”.
Provided both President Trump and the Iranian President Masoud Pezeshkian aren’t playing an April Fool’s Day trick on us, we should be happy that this day has arrived.
Away from the Middle East and the SMH has outlined what other changes are expected to show up on April 1. Here’s a quick list:
- The cut in the fuel excise tax saving 26.3 cents per litre for unleaded petrol cars and 32.4 cents for diesel vehicles. But note, the price drops won’t actually happen today.
- The average premium for private health insurance rises 4.41%, though your provider could charge more or less.
- Quarterly electricity bills will no longer have the $75 off gift from the Energy Bill Relief Fund, which has finished.
While these are nice little gifts for April 1, the end of the war will bring petrol prices down. Ultimately, that will filter through to lower inflation than was expected and could save us from some interest rate rises that could have come through if this war dragged on for months.
For history buffs, while the history of April Fool’s Day is uncertain, one popular explanation is that in 1582 the French changed New Year’s Day from April 1 to January 1. Those who kept celebrating New Year’s Day on April 1 were targeted and called fools!
