Dow Jones Industrial Average (DJIA) futures swung wildly on Wednesday as traders come to terms with the shock departure of Trump White House warmonger John Bolton. His resignation triggered a swift drop in the oil price and a small relief rally for global stock markets.
Bolton’s aggressive military stance on the global arena blocked progress in all aspects of foreign policy. His removal immediately released the pressure valve on global tensions with Iran, Venezuela, and North Korea. Analysts believe his presence in the White House also slowed down trade negotiations with China.
“John Bolton was a huge headwind for a trade deal with China, markets reacted as such” - Oliver Sloup, Blue Line Futures brokerage.
I informed John Bolton last night that his services are no longer needed at the White House. I disagreed strongly with many of his suggestions, as did others in the Administration, and therefore....
— Donald J. Trump (@realDonaldTrump) September 10, 2019
Dow futures swing wildly on Wednesday
At 5.19 am ET, Dow Jones Industrial Average (DJIA) futures traded flat, up by a marginal 17 points, following an overnight session of choppy swings.
John Bolton triggers oil price drop
The most immediate market reaction came from oil traders. The oil price dropped immediately after his resignation.
BREAKING: JOHN BOLTON FIRED
— Joe Weisenthal (@TheStalwart) September 10, 2019
Traders anticipate that Bolton’s departure will pave the way for dialogue with Iran and perhaps looser sanctions on the regime. The effect of which could increase oil supply from the region. More importantly, his resignation reduces the likelihood of conflict in the Middle East, a key pressure gauge for the oil price.
Dow relief as global tensions ease
Bolton’s departure eased tensions across the globe, like releasing a pressure valve on US foreign policy. In particular, Trump will have less resistance when it comes to dialogue with North Korea.
“Bolton’s departure would open the US up to taking a softer approach to talks with North Korea” Scott Seaman, Eurasia Group.
“Trump will have limited domestic opposition with regard to his soft stance on North Korea” - Waqas Adenwala, Economist Intelligence Unit.
Aside from the infamous “fire and fury” threat, Trump’s go-to foreign policy stance has always been diplomatic. He favors negotiation over military action. With one less warmongering voice in the White House, trade talks with China may even accelerate.
Other stock market factors on Wednesday
Dow futures are also enjoying a small boost from Apple’s successful iPhone reveal last night. Investors sent Apple stock 1% higher as Tim Cook unveiled the iPhone 11 with an enticing low entry price point. Cook simultaneously dealt a blow to Netflix and Roku with more details on Apple’s streaming service.
Elsewhere, the anticipation of monetary loosening at the European Central Bank buoyed eurozone indices in Wednesday’s trading session.
Last modified (UTC): September 11, 2019 11:20 AM