📰 Market Report.
💥 Once again, another attempt to negotiate and reach peaceful agreements has been neutralised by a surprise attack. On Friday, Iran’s foreign minister met in Switzerland with the foreign ministers of Germany, France and the United Kingdom. Hours later, Trump announced that the US had launched a devastating attack on Iran.
⚔️ This adds to the sabotage of peace agreements that global peace efforts have suffered in recent weeks, such as the surprise Ukrainian attack on Russian military bases two days after the US-sponsored peace negotiations. Or the Israeli attack that killed part of the negotiating team the same week that US officials had met with them.
🇺🇸 The United States attacked Iran this weekend. The president who won the US elections by claiming he was the only one capable of bringing peace and avoiding a global conflict has launched an attack against a major power in the Middle East. A power closely linked to Russia and China, which further increases the chances of a global escalation of the conflict.
🗃️ Russia says the US has opened Pandora’s box with its attacks on Iran, and no one knows what consequences this will lead to.
🗣️ Hypocritically, Trump posted on social media, alongside the same message about the attack on Iran, that ‘times of peace’ were now coming. Orwellian language that, unfortunately, we have become accustomed to in recent years. War is peace, freedom is slavery.
🛑 The absence of images that clearly show the destruction of nuclear facilities, along with statements from Iran about possible ‘limited damage,’ suggest the possibility that the US may need to launch a second strike to ensure the outcome.
🗨️ Former Russian President Dmitry Medvedev criticized the U.S. airstrikes on Iran, arguing that the operation failed to achieve its objectives while escalating regional instability. He noted that Iran’s nuclear infrastructure remains largely intact, with uranium enrichment—and potentially nuclear weapons production—continuing unabated.
💣 Reports suggest some nations may even supply Iran with nuclear warheads directly. Meanwhile, Israel faces retaliatory attacks, and the U.S. risks being drawn into a broader conflict, possibly including a ground war. Far from weakening Iran, the strikes could have bolstered its political system and unified public support behind its leadership.
⏳ Now we just have to wait for Iran’s response. It was reported that Iran’s parliament has endorsed a proposal to block the Strait of Hormuz, though Iranian media indicated that such action would require ratification by the Supreme National Security Council before implementation. The global economy would be further restrained by any notable spikes in the price of natural gas or oil, or by disruptions in commerce brought on by a further intensification of the conflict.
📊 Here are the three main options that Bloomberg Economics sees for how Iran could respond to the US bombing of Iranian targets: Attacks on US personnel and assets in the region, targeting regional energy infrastructure or closing the Strait of Hormuz maritime chokepoint using underwater mines or harassing ships.
⛽ About a fifth of the world’s daily oil supply goes through the Strait of Hormuz, so any disruption would have significant global consequences. China, as the largest buyer of Iranian oil, would face the most obvious consequences.
🚢 Disruptions to shipping through the Strait would also have a major impact on the global liquefied natural gas (LNG) market, as Qatar uses this route for a significant portion of its LNG exports.
📈 In the extreme scenario where Iran shuts down the Strait of Hormuz, crude oil prices could soar past $130 per barrel, which could push US CPI inflation close to 4% in the summer. This could prompt the Federal Reserve and other central banks to delay future interest rate cuts.
🛢️ OPEC+ members like Saudi Arabia have spare production capacity that could be activated. The International Energy Agency may also choose to release emergency stockpiles to try to stabilize prices.
🌐 All this does not come alone. The global economic situation was already tense, given that Trump’s famous reciprocal tariffs will return in July, which will once again put pressure on global trade and international relations.
🏛️ We must not overlook an important factor, which is Donald Trump’s internal weakness in the United States following his intervention in this conflict. Last week, we mentioned important heavyweights who have publicly supported Trump and are now expressing their disappointment with this decision. In recent days, Trump has lost the support of Elon Musk, Tucker Carlson, Steve Bannon and, finally and most importantly, we learned before the attack on Iran that even the US Vice President, JD Vance, did not agree with it.
📞 During a high-level phone call with Israeli officials—including Prime Minister Benjamin Netanyahu—Vice President Vance reportedly stated, “Israel is dragging us into war with Iran,” and cautioned that the United States should not be directly involved in a military escalation.
⚖️ Not to mention the statements made by several members of Congress after the attack, asserting that Trump’s actions had been illegal, given that he must inform Congress before involving the country in a war.
🇮🇱 Donald Trump seems willing to sacrifice his political career to unconditionally support Netanyahu and his war in the region. Some joked that Trump’s MAGA (Make America Great Again) agenda was now MIGA (Make Israel Great Again). Ironically, Trump recently posted the word MIGA on his social media accounts, referring to advocating for regime change in Iran, Make Iran Great Again.
📉 Market View:
📊 Markets appear to open with distrust following the United States’ attack on Iran over the weekend. The Mini S&P 500 futures are attempting to stay above 6,000 points, while the Nasdaq 100 futures are trying to remain close to 22,000 points, currently trading at 21,800 points.
💵 The dollar has strengthened, with its DXY index rising to 99 points. This has caused major Forex pairs against the dollar to experience volatility. Notably, the USD/JPY pair starts the week up 1% from Friday’s values, currently trading above 147.30.
📈 Additionally, we detect wedge formations in the charts of US bonds, which would indicate unease in fixed income markets and possible global instability that could drive bond demand.
🇪🇺 In Europe, prices are also trading negatively. The DAX 40 futures fall below 23,300 points at this time. The Euro Stoxx 50 futures struggle to maintain 5,200 points.
🛢️ Oil contracts are attempting to stabilise after a volatile start in the Asian session, where Brent crude surpassed $80 per barrel.
🪙 Gold futures also experienced an upward movement, surpassing $3,400 per ounce but later falling to the current $3,370.
₿ Bitcoin, which initially showed little sensitivity to the conflict, suffered sharp declines during Sunday, losing $100,000 and rebounding upwards in recent hours to the current $101,800.
