Market volatility rises following US-Iran tensions
Geopolitical unrest in the Middle East has rattled global markets, following a coordinated US and Israeli airstrike on Iranian nuclear sites over the weekend. US President Trump described the move as a “spectacular military success,” but Iran’s pledge of “everlasting consequences” has stirred fears of retaliatory actions. As oil prices surged, so did investor anxieties around inflation and economic stability.
These developments come just days after the US Federal Reserve opted to keep its interest rates unchanged for the fourth straight meeting, maintaining the benchmark rate at 4.25%–4.5%. The Fed’s decision, while unanimous, revealed internal divisions: seven policymakers expect no rate cuts this year, while eight foresee two. With energy prices now surging and global risks mounting, the central bank faces renewed uncertainty in its path forward.
Weekly market recap
An overview of how equity markets, energy prices, and key sectors responded to recent developments.
Mixed performance across US indices
Last week closed with muted moves across US stock indices. The S&P 500 dipped by 0.2%, while the Nasdaq saw a slight gain of 0.2%. The Dow Jones ended virtually flat. Volatility spiked during Friday’s session, influenced by triple witching, an event involving the expiry of stock options, index options, and futures, driving trading volumes above seasonal averages.
Tech shares lagged, while energy stocks rallied amid climbing oil prices. In economic data, retail sales posted a decline, driven mainly by weaker auto spending following recent tariff hikes. However, core retail figures remained resilient, supporting the case for cautious optimism.
Global market movements
Here’s how key global regions reacted to rising geopolitical tensions and market shifts.
Asian markets under pressure
Asian equity markets slumped on Monday, with benchmarks in Japan, China, and Australia falling. While positive PMI results offered some encouragement, they were overshadowed by renewed fears of oil supply disruptions stemming from the Middle East conflict. The spike in oil prices further amplified inflation concerns and weakened investor appetite for risk.
US futures dip on escalating conflict
US stock futures edged lower in pre-market trade, with S&P 500 futures down 0.3%. Investors remain wary of the situation in the Strait of Hormuz, a crucial oil transit chokepoint, with concerns that Iran might disrupt energy exports or target US military installations.
European equities rebound
In contrast, European markets closed higher on Friday, as worries over deeper US involvement in the Middle East conflict eased. The STOXX 50 climbed 0.6%, while the STOXX 600 rose 0.1%. Travel and leisure stocks outperformed, with Kering, Unicredit, and Societe Generale among the top gainers. Energy names like Repsol, Eni, and Iberdrola underperformed amid profit-taking following oil price surges.
Commodities and currency market movements
Insights into the oil market and foreign exchange amid global tensions.
Oil prices spike on supply fears
Oil markets opened the week with strong gains, as Brent crude briefly reached $81 per barrel. Traders fear potential blockages in the Strait of Hormuz or additional sanctions on Iran. Analysts at ANZ now forecast oil prices to average between $90 and $95 if tensions escalate further.
Dollar strengthens amid flight to safety
The US Dollar Index rose to around 99, supported by increased demand for safe-haven assets. The euro fell to 1.1502 against the dollar as inflation fears and geopolitical risks drove investor flows toward the greenback. Markets are now closely watching upcoming US economic data for further direction.
Company news and noteworthy developments
Updates on key companies driving sector movements and innovation.
Tesla, Apple, and Meta innovate in AI and automation
Tesla has begun a small robotaxi pilot in Austin, Texas, using self-driving vehicles under human supervision. Despite regulatory hurdles, CEO Elon Musk called it a decade-long milestone.
Apple is exploring a potential acquisition of AI search startup Perplexity to enhance AI-powered features in its Safari browser. However, no formal offer or direct discussions with Perplexity’s management have yet taken place.
Meta, in partnership with Oakley, will launch new smart glasses, Oakley Meta HSTN, in July, featuring AI tools, audio tech, and water resistance.
Pharmaceutical and retail developments
Novo Nordisk reported positive trial results for its experimental weight-loss drug CagriSema, with plans to seek regulatory approval in early 2026 and launch in early 2027.
Kroger raised its 2025 sales forecast and plans price reductions to counteract inflation. The grocer also reviewed its e-commerce operations after its Ocado partnership ended.
Financial and strategic moves by major firms
UniCredit is expected to retract its offer for Banco BPM amid regulatory and legal barriers. It also dismissed potential Commerzbank acquisition plans and voiced concerns over the Monte dei Paschi stake sale.
Accenture launched a new AI business unit after reporting a drop in new bookings but beating earnings estimates.
CarMax reported strong quarterly results, with higher used vehicle sales and profit per unit.
Amazon, Netflix, and Mondelez all received upgraded price targets from major analysts due to improved margins and market positioning. Morgan Stanley cut its target on LVMH, citing short-term headwinds, while Barclays upgraded Tui on earnings momentum and reduced debt.
What to watch this week
Key events and data releases that may drive markets.
Investors will remain focused on the evolving Middle East conflict and its impact on oil prices. Federal Reserve Chair Jerome Powell’s upcoming testimony is expected to shed light on the central bank’s outlook. Additionally, flash PMI reports from the US, Eurozone, Japan, and India could provide further clarity on global economic momentum.
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