Global Markets Pull Back – Bitcoin Stutters – Iran / Saudi Arabia Tensions Threaten Peace
Indices have a flat start to the week, Bitcoin prices dip and dive, plus – will an emboldened Saudi regime threaten stability in the Middle East?
US markets opened broadly flat today with very small gains for major equities. The top gaining stocks in early trading across the biggest indices were Procter&Gamble (+1.26%), Walmart (+1.05%), Home Depot (+0.75%) and McDonald’s (+0.80%).
General Electric stock continued its slide downwards today by over -4%, thanks to a massive amount of short-selling by investors after news came that the industrial conglomerate was cutting its 2018 profit forecast. The firm also said it would be slashing its dividend in half to 12 cents a share from 24, as well as announcing it would be going through a long restructuring process. Sadly for GE investors, it is yet another blow to a share price which has been heading lower all year.
European stocks were generally weaker this morning, but the FTSE100 moved up thanks to a weaker Pound, which fell against the US Dollar and the Euro. This dip came off the back of a report in the Sunday Times, which said that 40 members of Parliament have agreed to sign a letter of no confidence in Tory leader Theresa May. Mrs May has already seen 2 prominent members of her cabinet leave in disgrace in the past 2 weeks. The former Defense Secretary Michael Fallon was dismissed after allegations of sexual harassment, then the Secretary of State for International Development Priti Patel resigned after it was revealed she had met with Israeli officials in secret without the consent of the Prime Minister.
EU negotiations also seem to be reaching a pressure point. Conservative Brexit secretary David Davis seemed to dismiss the EU’s call for a 2-week deadline for a financial ‘divorce’ settlement. The European Union is putting pressure on the UK to concede to their request for payment, and have indicated that they will not let the Brexit negotiations proceed to trade talks until this settlement has been agreed on.
Speaking to Sky News, Davis said that “In any negotiation, each side tries to control the timetable.” The deadline is a more aggressive negotiating tactic from the EU, but given the comments from Davis, it will not necessarily be properly recognized by the UK. If both sides get stuck in this stalemate for too long, talks between the two could easily fall apart, leaving the UK without a custom trade deal with the EU. This could be harmful to certain firms.
Elsewhere in currencies, Bitcoin fell from over $7700 last Wednesday, to $5500 over the weekend, but is now picking up steam again this Monday. Prices have jumped back to $6,430 at the time of writing. The falls apparently came after developers called off an upgrade called SegWit2x, first planned for November 16th. This upgrade would improve Bitcoin transaction speeds, but support for the process has waned in the last few months.
Brent Crude prices are also weaker – down to $63.37. This is due partly to tensions between Iran and Saudi Arabia in the Middle East, as well as an increase in US oil production. Just 1 week ago, Houthi rebels (backed by Iran) fired a missile towards an airport in Saudi Arabia’s capital of Riyadh in an unprecedented move that has been seen by the Saudi’s as an act of war.
There are widespread concerns that an emboldened Saudi Arabia will start a conflict with Iran, especially now that it has a strong backing from the USA in the form of the Trump administration, which is fervently anti-Iran and wants to scrap the nuclear deal signed by Obama. After signing a huge $350 billion arms deal with the Kingdom earlier this year, the US has ‘taken sides’ in a region fraught with problematic relationships between nations.
The political situation in Iran under Saudi Crown Prince Mohammed Bin Salman has become increasingly more precarious, as the 32-year old initiated an anti-corruption campaign which has seen dozens of members of Saudi Arabia’s political and business elite being arrested amidst a large-scale purge.
The risk of war between Iran and the Saudi’s also went higher this weekend after Bahrain linked an explosion at its main oil pipeline to Tehran (Iran’s capital).
Tech Takeover Tanks
In other news. Broadcom will not be buying its rival Qualcomm, according to reports published today.
The $103 billion bid by Californian semiconductor giant Broadcom was unanimously rejected by Qualcomm’s board today, nullifying what would have been the biggest tech buyout in history.
CEO Steven Mollenkopf and many shareholders felt that the $70 per share bid undervalues the company and didn’t account for regulator risks, according to a report in Seeking Alpha.
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