Global Market Quick Take: Asia – June 16, 2025

Key points:

• Macro: Israel and Iran continues attacks on each other
• Equities: Equity futures higher on Monday despite Middle East tensions
• FX: EURUSD touches 3 year high of 1.1630 before pulling back
• Commodities: Gold neared a record high on haven demand
• Fixed income: Treasuries dropped as haven demand eased, while oil futures stayed high

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Israeli drones targeted the South Pars and Fajr Jam Gas Refineries on Saturday, according to Tasnim News Agency. Reuters reports that Iran has partially suspended gas production at the South Pars field, the world's largest, after an Israeli strike caused a fire.
• Trump mentioned the possibility of US involvement in the Israel-Iran war, although the US is not currently considering joining the conflict to eliminate Iran's nuclear program, according to ABC news.
• According to various media sources, Israel and Iran have initiated new assaults on each other's major cities, with the exchanges of fire extending into a third day on Sunday.
• The University of Michigan's consumer sentiment index for the US increased to 60.5 from 52.2 in May and April, surpassing expectations of 53.5. This marks the first rise in six months, with gains in current conditions and future expectations. Despite this, sentiment remains 20% below its December 2024 level, when confidence temporarily surged post-election.

Equities: 

• US - US stocks fell sharply on Friday as risk appetite diminished following Iran's condemnation of Israel's airstrikes as a "declaration of war" and subsequent missile attacks. The strikes on Iran's nuclear and military sites heightened geopolitical tensions, unsettling global markets. The S&P 500 and Nasdaq dropped 1.1% and 1.3%, while the Dow Jones fell 769 points. Financials and tech led the declines, with Nvidia down 2.1%, Apple 1.4%, and Visa and Mastercard over 4%. Airline stocks also dropped, with American, Delta, and United down 4.5% to 5%. Conversely, energy and defense stocks rose as oil prices surged nearly 7%; Exxon gained 2%, and Lockheed Martin, RTX, and Northrop Grumman climbed over 3%. For the week, the S&P 500 is up 0.5%, while the Dow and Nasdaq are set to lose 1.5% and 0.8%.
• EU - The STOXX 50 fell 1.4% and the STOXX 600 dropped 1% on Friday, reaching nearly one-month lows due to escalating Middle East tensions prompting a flight to safety. Israel's strikes on Iran targeted nuclear and military sites, killing two top commanders. Israel warned of further actions, while Iran vowed retaliation and deployed drones toward Israel. The auto sector suffered, with Stellantis (-3.4%), Ferrari (-2.8%), Mercedes-Benz (-1.6%), and BMW (-1.9%) among the worst performers. Conversely, oil, gas, and defense stocks rose amid security risks and higher energy prices, including Shell (0.8%), Eni (1%), RWE (1%), Rheinmetall (2.7%), and Thales (0.4%). For the week, the STOXX 50 is down 2.6%, and the STOXX 600 lost 1.7%.

FX:

• EURUSD fell to 1.15 after reaching a three-and-a-half-year high of $1.163 on June 12, as escalating Middle East tensions unsettled global markets, with AUDUSD trading below 0.65. Meanwhile, the USDCHF traded around 0.81 per USD, near its highest levels since 2011, due to a widespread flight to safety. USDJPY traded to 143 before rebounding on Friday, ahead of the upcoming BoJ meeting, which faces the challenge of rate hikes amid an uncertain global economic outlook.

Commodities:

• Oil surged again as Israel and Iran exchanged attacks, threatening supply from a region producing a third of global crude. Brent rose 5.5%, then fell below $76, while WTI neared $74. Israel hit the South Pars gas field after last week's strikes on Iran.
• Gold neared a record high as the Israel-Iran conflict drove investors to haven assets. It rose 0.6% in Asia, trading around $3,450 an ounce, close to its April peak. The hostilities boosted energy prices amid threats to regional infrastructure.

Fixed income:

• Treasuries ended Friday with losses as WTI crude surged up to 14% to its highest since January, closing up over 7% after Israel attacked Iranian nuclear sites. This rise overshadowed haven demand for Treasuries. Losses were reduced later as US stocks hit session lows following Iran's retaliatory missile barrage. Dollar swap spreads tightened, led by long-end tenors. Australian and New Zealand bonds followed global losses amid Middle Eastern tensions boosting inflation expectations through higher oil prices. The G7 summit and Bank of Japan meeting start today.

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