Kospi leads decline

US stock index futures sold off steadily overnight. Investors factored in higher oil prices due to a resumption of tit-for-tat hostilities between the US and Iran. These included IRGC attacks on US military assets in Bahrain and Kuwait, which elicited a sharp response from US forces in the region.

But all the indices took a sharp leg to the downside soon after the European open. This followed a comment from President Trump to his NATO allies in Turkey when he said that, as far as he was concerned, the ceasefire was over. The news led to generalised selling, rather than the tech-led rotation that investors have become used to after many months.

Tech stocks were hit hard, but so was the small cap Russell 2000, while the S&P and Dow also dropped over 1% in early trade. Last night it was rotation as usual. The NASDAQ 100 fell 1.8%, while the Dow gave up a modest 0.3%.

Source: TN Trader

But today’s action is far more ‘risk off’ as traders clocked a 6% jump in oil prices, and as US Treasury yields made additional gains. The former move was helped along by news that the Trump administration had revoked a licence that had allowed Iran to export oil. The latter was driven by an uptick in inflation expectations.

The CME’s FedWatch Tool now shows that the probability of at least one 25-basis point rate hike from the Fed before year-end is over 85%. In this regard, investors will pay close attention to minutes from the Fed’s last monetary policy meeting in June, which will be released later this evening. But, with the new Fed Chair, Kevin Warsh, unwilling to provide forward guidance, it’s debatable if the minutes will be that helpful in understanding the Fed’s outlook for rate hikes this year.

European stock indices were hit hard this morning, with most of the majors down over 2% by mid-morning. As with US stock index futures, there were relatively modest declines overnight as investors responded to rising energy prices due to an uptick in hostilities between the US and Iran. But the selloff accelerated this morning after President Trump addressed his NATO allies in Turkey, saying that as far as he was concerned, the US/Iran ceasefire was over.

Source: TN Trader

Both WTI and Brent crude were up over 6% at one stage, raising fears that oil prices were no longer contained and could therefore contribute further to global inflation. Bond markets reflected these concerns, with yields moving higher as traders reassessed expectations for future monetary policy.

Spanish equities took an additional hit this morning after President Trump unleashed a full-scale broadside against the country, calling Spain a ‘terrible partner’ in NATO, as it neither paid nor participated. He went on to urge other countries to cut all trading ties with Spain, ‘...including visits’.

Investors are on tenterhooks, wondering what the US President may say next. In the meantime, they await minutes from the last Federal Reserve monetary policy meeting. These should be interesting given Chair Kevin Warsh’s preference for less forward guidance and more data-dependent policymaking. Yet any hawkish language could trigger renewed volatility across global markets.

There was a mixed picture across FX this morning. The cash Dollar Index was well bid as it reopened overnight. But it then lost ground as the Asian Pacific session progressed. It went on to rally sharply following President Trump’s comments this morning when he told NATO allies that, as far as he was concerned, the US ceasefire with Iran was over.

Matters weren’t helped, for the euro that is, when the President urged NATO members to cut all trading ties with Spain due to their reluctance to contribute to the security grouping. Investors sought out the relative safety of US dollars as, yet again, geopolitical instability took hold.

There had been a succession of tit-for-tat military engagements between the US and Iran. These began at the end of last week after Iran launched an attack on a vessel near the Strait of Hormuz. It would now appear that military action between the two sides looks likely to escalate, in the short-term at least.

The jump in oil prices has spiked renewed inflation fears. This has fed through into higher US Treasury yields, which should support the dollar to some extent.

The Japanese yen lost ground this morning. The USD/JPY topped 162.50 at one stage, bringing it back within sight of the forty-year high (for the dollar) hit this time last week. Yet traders remained alert to the possibility of official intervention. Japan’s Finance Minister Satsuki Katayama reiterated that authorities remain ready to intervene if currency movements become excessive.

Source: TN Trader

Last night, gold dropped briefly below $4,100 per ounce. But it then spent most of the Asian-Pacific session edging higher, putting a decent stretch of clear water between it and yesterday’s low. But prices tumbled this morning following President Trump’s comments at the NATO summit in Ankara.

Mr Trump said that as far as he was concerned, the ceasefire with Iran was over. The news saw crude oil prices surge, along with the US dollar. This was enough to put the skids under the recent recovery in the price of gold. It quickly fell below $4,050 to hit its lowest level since last Thursday. This has certainly been a hiccup in gold’s recent revival, and it will probably shake out some recent buyers.

There is some obvious support just south of $4,000. But if that were to break this time round, then gold could have further to fall. Despite this, there are voices out there saying that gold is close to forming a bottom, which could result in higher prices along the line.

Source: TN Trader

Silver dropped to $59.50 overnight before buyers steamed in to drive up prices to $61 per ounce in early trade this morning. But just as it appeared silver was finding its feet, President Trump pulled the rug from under them at the NATO summit in Turkey.

Following escalating hostilities between the US and Iran, with the latter attacking US military assets in Kuwait and Bahrain, Mr Trump declared that, as far as he was concerned, the ceasefire was over. This triggered a jump in the US dollar and a sharp retreat across precious metals.

Silver found some support just above $58. But as things stand, there hasn’t been much of a rebound. Despite this, the daily MACD has made some upside progress, having curled up from very oversold levels. That is giving the bulls some comfort, at least.

Source: TN Trader

Oil prices surged higher this morning, adding to gains made yesterday. The latest move came after President Trump announced this morning that, as far as he was concerned, the US/Iran ceasefire was over. Previously, traders reacted to a significant escalation in tensions between Washington and Tehran, which followed an Iranian attack at the end of last week on a vessel close to the Strait of Hormuz.

Since then, there have been several tit-for-tat military actions between the two sides. The latest was a full-throated US response against Iranian military targets. This appears to have been in retaliation following Iranian missile attacks on US military facilities in Kuwait and Bahrain.

The main issue here seems to be returning the Strait of Hormuz back to what it was before the war began at the end of February. But Tehran wishes to maintain a stranglehold on the Strait, deciding who passes through, and charging transit fees where it deems necessary.

Obviously, this doesn’t sit well with President Trump or his administration, who would struggle to explain to the world just what this war had achieved, should Iran wrest control over this major chokepoint for global energy supplies. In the meantime, the US has reimposed sanctions on Iranian crude.

It’s worth noting that oil was looking very oversold when considering its daily MACDs. Now a bounce is underway, which may need some time to play out. Then, traders will have to reassess the situation, given what now happens between the US and Iran.

Source: TN Trader

Bitcoin fell sharply overnight, pulling back further from the two-week high hit on Monday. Investors reduced their exposure to cryptos in general as the US and Iran resumed hostilities. Market participants are also monitoring US regulatory developments.

Reports suggested the Securities and Exchange Commission could introduce a new framework known as “Reg Crypto,” which may provide regulatory exemptions and clearer guidelines for digital asset businesses. Bitcoin’s daily MACD has picked up from oversold conditions, although it remains below the ‘neutral’ line. But it could be argued that Bitcoin was due for a bit of a pullback, given the gains made over the past week.

Markets remain focused on geopolitical developments after the US/Iran ceasefire appears to have broken down. The rise in oil prices and increase in the VIX volatility index suggest investors are becoming more cautious, although broader market conditions remain relatively orderly.

The Federal Reserve’s June meeting minutes represent the key event of the day and could provide important insight into how policymakers view inflation, interest rates, and economic growth under Chairman Kevin Warsh’s leadership.

Elsewhere, earnings season begins next week with major US banks, including JPMorgan Chase and Goldman Sachs, scheduled to report, likely shifting market attention back toward corporate fundamentals.

For now, investors are navigating a complex mix of geopolitical risk, inflation uncertainty, central bank policy expectations, and ongoing sector rotation away from some of the market’s most crowded technology and artificial intelligence trades.

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