Futures Slip Ahead of US Return; Iran-US Talks in Focus | Horizons Middle East & Africa 2/17/2026

Key Concepts

Geopolitical Risk: Increased tensions in the Middle East, particularly surrounding Iran and its naval exercises, impacting oil prices and market sentiment.
Market Caution: A prevailing sentiment due to thin liquidity (Lunar New Year, President’s Day) and geopolitical uncertainties.
Shift in Global Equities: A move away from U.S. exceptionalism, with Asian and European markets outperforming. Specifically, Japan is highlighted as a strong performer.
Interest Rate Expectations: Market pricing in of potential interest rate cuts by the Federal Reserve following softer-than-expected CPI data.
Commodity Focus: Attention on oil (Brent, WTI) and copper, influenced by geopolitical events and global demand.
AI Disruption: Concerns about the impact of AI on the software sector, potentially leading to a “software-as-a-service armageddon.”
US-China Relations: Discussion of potential weapon sales to Taiwan and the implications for US-China relations.
Russia’s Influence in Africa: Russia’s efforts to expand its influence in Africa through cultural, religious, and military means.
Ukraine-Russia Negotiations: Ongoing negotiations mediated by the US, with a focus on territorial disputes.

Market Overview & Global Economic Trends

The broadcast opened with a snapshot of global markets following the President’s Day holiday and Lunar New Year, characterized by thin liquidity and a cautious outlook. U.S. futures were falling, while Treasury yields edged higher. WTI crude oil prices were rising due to heightened geopolitical risks stemming from Iranian naval exercises ahead of talks with the U.S. in Geneva. BHP, the world’s largest miner, reported strong first-quarter profits driven by a copper rally. The Nikkei experienced a pullback after recent record highs. Gold prices fluctuated, initially benefiting from expectations of Fed rate cuts but then experiencing a sell-off. Brent crude was trending weaker ahead of the Iran-U.S. negotiations.

A key theme discussed was the end of “U.S. exceptionalism” in equity performance. Asian stocks, particularly Japan, have significantly outperformed U.S. stocks year-to-date. European markets have also shown positive performance. Japan’s market is expected to continue rising by 7-10%, fueled by leadership changes and economic reforms under Prime Minister Kakei. Emerging markets are up 10%, led by Japan, while U.S. stocks are flat and U.S. tech is down.

Japan’s Economic Outlook

The interview with Market Insights highlighted a bullish outlook on Japan. Several factors are contributing to this positive outlook:

Technology & Robotics: Japan remains a leader in these sectors.
Political Leadership: Prime Minister Kakei’s reform policies are seen as beneficial.
Fiscal Policy: Focus on economic growth.
Inflation Control: Inflation is currently under control in Japan.
Rate Hikes: Expectations of three rate hikes by the Bank of Japan (GGB’s).

The speaker emphasized the importance of stability – wage growth, rate hikes, controlling inflation, and stable JGB yields – for sustaining the positive momentum in Japanese equities.

Commodity Markets: Oil & Copper

The broadcast focused on the commodities complex, particularly oil and copper.

Oil: Brent crude was trading just shy of $69, down 0.5% ahead of the Iran-U.S. negotiations. A military build-up on both sides of the Strait of Hormuz added to the geopolitical premium. Oil prices had experienced weekly declines.
Copper: BHP’s earnings were significantly boosted by copper prices, with copper now contributing over 50% of their earnings. BHP is increasing its copper production capacity, aiming for 2.5 million tons by the mid-2030s. The company is also exploring inorganic growth opportunities but maintains a high bar for acquisitions. BHP’s strategy of diversifying into copper is paying off as iron ore demand plateaus.

Technology Sector Disruptions & AI

The discussion touched upon disruptions in the technology sector, specifically a “shortage for memory chips” and a “software-as-a-service armageddon.” The speaker noted that Micron is investing over $200 billion in increasing memory chip capacity, impacting companies like Apple (10% of iPhone cost is memory chips, impacting price by 15%). The rise of companies like Anthropic, providing AI-powered services, is causing a significant fallout in the software sector. The market is reacting quickly to these changes.

Geopolitical Hotspots: Iran & Ukraine

Iran-U.S. Negotiations: Talks are set to resume in Geneva, with President Trump stating he will be “indirectly involved.” Iran is seeking guarantees regarding its right to enrich uranium in exchange for easing sanctions. The negotiations are expected to be protracted, potentially lasting a month. Simultaneous Iranian military drills in the Strait of Hormuz and a U.S. military build-up add to the tension.
Ukraine-Russia Negotiations: The U.S. is attempting to broker an agreement between Ukraine and Russia, focusing on territorial disputes. The U.S. position is perceived as leaning more towards the Kremlin than Ukraine, with President Zelenskyy expressing frustration.

Russia’s Expanding Influence in Africa

Russia is actively seeking to expand its influence in Africa through a multi-faceted approach:

Cultural & Religious Outreach: Building churches and establishing cultural and language centers.
Scholarships: Offering scholarships to African students.
Military Recruitment: Recruiting African soldiers to fight in Ukraine, often under false pretenses. At least 300 African soldiers have been killed.
Messaging: Promoting narratives about Western decadence and the negative impacts of globalism.

Other Notable Developments

Saudi Arabia’s Investment Push: The head of Saudi Arabia’s Public Investment Fund (PIF) has been appointed Investment Minister, tasked with tripling foreign direct investment (FDI) to $100 billion by 2030.
Egypt’s Economic Recovery: Investor sentiment towards Egypt is improving due to falling inflation, a stronger balance of payments, and a weaker U.S. dollar.
Canada & Chinese EVs: A majority of Canadians are open to buying Chinese-made electric vehicles, following Prime Minister Trudeau’s lowering of tariffs on imports.

Synthesis/Conclusion

The broadcast painted a picture of a complex and evolving global landscape. Geopolitical risks, particularly in the Middle East and Ukraine, are driving market volatility. A shift is occurring in global equity performance, with Asia, especially Japan, outperforming the U.S. Commodity markets are closely watched, with oil and copper prices influenced by geopolitical events and economic trends. Technological disruptions, particularly in the AI space, are reshaping industries. Russia is actively seeking to expand its influence in Africa, raising concerns about its methods. Overall, the prevailing sentiment is one of caution and uncertainty, requiring careful monitoring of these key developments.