Market volatility intensifies amid Middle East conflict
Global financial markets faced renewed uncertainty as rising tensions between Israel and Iran sparked concerns of broader regional escalation. Reports of Israeli strikes on Iranian nuclear facilities were met with retaliatory missile and drone attacks from Iran, raising fears of potential U.S. military involvement.
Investor caution prevails
Ongoing geopolitical uncertainty led to cautious sentiment across markets. Although President Donald Trump is expected to decide on a U.S. response within the next two weeks, a White House announcement noted the timeline, though previous experience suggests such deadlines may pass without concrete action.
Brent crude futures, after a 2% drop on Friday, remained on course for their third straight weekly gain, reflecting continued worries over potential supply disruptions from the Middle East.
U.S. market closures and global reactions
With U.S. markets closed for Juneteenth, global investors had limited signals to guide trading.
Early moves in Asia and bond market trends
In Asian trading, futures for the Nasdaq and S&P 500 edged lower, signalling uncertainty rather than panic. Bond markets remained relatively steady, with the U.S. 10-year yield at 4.389% and the 2-year yield slightly softer.
The Bank of England left interest rates unchanged but hinted at possible loosening if economic conditions weaken. Meanwhile, gold prices dipped as investors weighed the appeal of safe-haven assets against changing expectations for global interest rates.
Regional market performance
Global equities reflected mixed investor sentiment, influenced by both geopolitical uncertainty and evolving central bank policies.
Asia: Mixed sentiment across the region
Asian equities saw mixed results on Friday. While shares in Japan slipped due to rising inflation and expectations of further Bank of Japan rate hikes, technology-focused markets in South Korea and Hong Kong advanced, offering some resilience to regional indices.
U.S. indices reflect uncertainty
U.S. equity futures pulled back amid growing concerns over a potential military strike on Iran. Nevertheless, both the Nasdaq Composite and S&P 500 remain modestly higher for the week, while the Dow Jones lags slightly in negative territory.
Europe: Hawkish Fed and geopolitical risk weigh on stocks
European markets ended lower, influenced by the Federal Reserve’s cautious outlook and Middle East tensions. The STOXX 50 dropped 1.3% to 5,200, and the STOXX 600 declined 0.8% to 536. Notable moves included:
- Adyen down 3.5% amid tech sector weakness
- Major banks are off by over 1.5%
- LVMH declined 2.5% due to broker downgrades and outlook concerns
Currency and commodities update
The dollar and crude oil markets remained sensitive to geopolitical risks, with investor focus on safe-haven flows and energy supply constraints.
Dollar strengthens on safe-haven appeal
The U.S. dollar index dipped slightly to 98.6 but remains poised for a weekly gain as investors seek safety amid geopolitical uncertainty. The euro struggled, with EUR/USD trading at 1.1515, as markets weighed the Fed’s conservative tone and slowing growth projections.
Oil prices hold despite temporary dip
Oil prices declined modestly in Friday’s Asian session as immediate escalation fears eased following the White House’s announcement that President Trump will decide on a potential strike against Iran within two weeks. However, both Brent and WTI futures are set for their third weekly rise, underpinned by a significant drawdown in U.S. crude inventories and persistent Middle East tension.
Major stocks in the headlines
Several companies experienced notable share price movements due to strategic developments, analyst actions, and operational events.
Microsoft and OpenAI navigate strategic roadblocks
Microsoft is reportedly prepared to pause its high-stakes negotiations with OpenAI over critical issues such as the size of its future equity stake, while relying on their existing commercial contract until 2030. Despite tensions, both companies remain optimistic about their collaboration.
SpaceX faces setback with starship explosion
SpaceX’s Starship rocket exploded during a test in Texas due to a nitrogen gas storage failure. No injuries were reported, and investigations are ongoing.
Airbus secures major orders despite industry headwinds
Airbus announced $21 billion in new orders at the subdued Paris Air Show, including 10 aircraft for Taiwan’s Starlux Airlines. Boeing, by contrast, made no new announcements following the Air India 787 crash. Despite supply chain challenges, Airbus reported fewer production disruptions and focused on expanding A220 orders, alongside a U.S.-German defence collaboration to develop drones.
Trump extends TikTok deadline
President Trump extended the deadline for ByteDance to sell TikTok’s U.S. assets to September 17, despite a law mandating the app’s sale or shutdown. He expressed optimism about Chinese approval, as TikTok continues negotiations with U.S. officials amid legal scrutiny.
MTU Aero engines gets a boost
Deutsche Bank upgraded MTU Aero Engines to “Buy,” raising its price target to €425, citing improved guidance through 2030, a decline in grounded aircraft, and robust demand for the geared turbofan program.
Key data and upcoming events
Traders are monitoring a set of key economic indicators and earnings reports that could influence near-term market sentiment. Stay updated with full market insights at Moneybase.
What to watch
Economic indicators to monitor include:
- U.S. Philadelphia Fed Manufacturing Index
- Germany’s Producer Price Index
- France’s Wage Growth and Business Confidence
- Eurozone M3 Money Supply
Earnings to watch: Accenture, Kroger, CarMax
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