January was something of a bifurcated market. Equities generally tried to remain sanguine amid unsettling geopolitical developments, and US bond market tilted decisively to a more negative view.
After a solid fourth quarter where equities in many countries all but levitated, investors tried to keep the party going into 2020. But they soon hit a ceiling. First was the assassination of Iran’s major general, Qasem Soleimani, on 3 January, which briefly caused fears of another major confrontation in the Middle East. Markets hiccupped for a couple days but settled down after the Revolutionary Guard mistakenly and tragically shot down a Ukrainian passenger jet. Overall, the incident focused global attention on how sanctions have crippled Iran’s economy and led to an increasingly restive population. For now, Iran is out of the headlines. But the next Iranian conflagration could just as likely be domestic as with one of its neighbours – with highly unpredictable implications almost guaranteed.
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