Andrew Hastie says Iran has detonated an economic nuclear bomb. Wall Street’s reaction so far: a shrug.
To normal people the Iran war’s most important issue, the Strait of Hormuz and the price of oil, is a hip-pocket explosion driving up spending to drive a car, akin to an interest rate rise, but the Coalition’s Andrew Hastie says it’s an “economic nuclear bomb”!
His claim comes as all US market indexes from the famous Dow Jones index to the tech-heavy Nasdaq index, that houses the likes of Amazon, Apple, Microsoft, Nvidia and Alphabet, to name a big few, are in the red after Monday’s stock market trading.
Interestingly, most of these big name companies’ share prices overnight rose but the chipmakers were all substantially lower.
And while this is important for share players, the signs are not there, yet, that the impasse in the Strait of Hormuz and the ceasefire in tatters, is signalling that an economic nuclear explosion is about to happen. That said, stock markets can sometimes miss what eventually looks like the bleeding obvious, as investors concentrate on the optimistic rather than the pessimistic.
In case you’re not an Andrew Hastie expert, he’s the Shadow Minister for Industry and Sovereign Capability. And there are those who tip he’s waiting for Angus Taylor to fail as the new leader of the Opposition as Pauline Hanson captures the conservative voters, who have deserted the Coalition of late.
So it is that Hastie is reported in the Daily Telegraph arguing Iran’s stranglehold over and now closure of the Strait of Hormuz is an “economic nuclear bomb”.
The ceasefire has given way to US air strikes of key Iranian targets over the weekend, while “Iran has in turn fired missiles at US bases in the region, with its neighbours also reporting damage to infrastructure and civilian areas over the weekend,” The Tele reports.
Hastie told the ABC Iran has numerous goals:
- America’s alliance network is being targeted economically and in physical destruction terms.
- Not just in the Gulf but “across the world with countries who depend upon the importation of commodities and oil from the Middle East.”
- It’s become a bargaining chip for Iran and a huge economic threat to the global economy.
- And it’s a political play to damage Donald Trump before the mid-term elections in November.
Hastie added: “They want to damage President Trump at the midterm elections as much as they can.” And while that is clearly their intention, right now financial markets are not seeing the Iranian war as an economic nuclear bomb.
While our stock market has performed terribly thanks to inflation, RBA interest rate policy and the Albanese Government’s failure to lift productivity, the US market has boomed indicating that the Iranian threat was expected to be manageable.
The chart below shows how our S&P/ASX 200 index has underperformed the S&P 500 index.
S&P/ASX 200 versus S&P 500
Our market, the blue line, is up 2.78% for the past 12 months, while the US rival has surged 19.89%.
The Yanks aren’t seeing any ‘nuclear bombs’ of an economic kind, yet, but there was a general belief that this war was over, and a ceasefire would become a peace deal, but in Tehran there seems to be a desire to keep Trump and the global economy under pressure.
They’re calling for Trump’s assassination, which isn’t helpful for a peace deal.
Overnight oil prices popped higher creating a headwind for stock prices and economic growth, which will also mean killing inflation will be harder.
A peace deal means lower oil prices, falling inflation and eventually lower interest rates and rising economic growth. If peace isn’t achieved, the opposite happens and it will blow up the more rosy outlooks for global economies and share prices.
It will be a bomb, with plenty of economic casualties but a nuclear bomb might be an exaggeration that you might expect of a politician who wants to become better known.
Despite being Malcolm Turnbull’s mate, Hastie is not Deputy Leader, that title belongs to the woke Jane Hume.