Market Report.
🛢️ Oil prices retreated from earlier highs after Iran said its military operations against Israel were over. China’s reduction of crude imports from 11.7 million barrels a day in February to under 9 million a day by late May is a key factor in keeping oil prices under $100, easing supply shocks.
🇮🇷 Iran’s Foreign Ministry told CNBC that Tehran had ceased strikes against Israel but warned it would resume hostilities if Jerusalem continues attacks on Lebanon.
🇮🇱 Prime Minister Netanyahu said Israel halted strikes for now but stated the fight against Iran and Hezbollah is not over.
🇺🇸 President Trump tried to keep the violence from escalating, saying on social media that Iran and Israel were looking to agree to a ceasefire and that U.S. negotiations with Iran on a final deal were proceeding.
🇵🇰 Pakistan’s Interior Minister Mohsin Naqvi traveled to Iran with a special letter for Supreme Leader Mojtaba Khamenei. The visit is part of Pakistan’s diplomatic push to end the 100-day US-Israeli war on Iran.
The media in Israel suggest Israel may have informed the US about their operations in Beirut.
🔍 A separate Israel Hayom analysis described the Dahiyeh strike as the first sign of Israeli independence from Washington. It raised the open question of whether the operation was coordinated with the U.S., and whether it was a one-off event or a shift in policy. Trump stated that he was not informed about these attacks.
🛎️ Israeli officials confirmed that the U.S. government was briefed before the strike, and the “no restrictions” remark suggests the administration did not block the operation. This contrast with Trump’s public calls for calm has fueled speculation of quiet backing from administration hawks.
🎯 The strike occurred around June 7, targeting Hezbollah command centers in response to rocket fire that violated the fragile ceasefire. Iran retaliated by firing ballistic missiles at northern Israel.
Clash between Trump and Netanyahu.
📱 Axios reported that Trump told Netanyahu during calls on June 7–8: “I said, ‘Bibi, you better be careful, or you will be on your own very soon.’” The warning came as Israel prepared major follow-on strikes against Iran.
🧭 A U.S. official told Axios: “Bibi needs the war to continue to stay politically alive in Israel, and Trump needs the war to end to stay politically alive in the U.S.” This frames the divergence in personal and political calculations driving the U.S.-Israel friction.
✂️ Israeli officials said Netanyahu ultimately canceled a planned large-scale strike on Iran after Trump’s warning, though Israel retained the right to continue operations in Lebanon
The precedent of Iran’s attacks on Israel.
🔁 Iran can now treat Israel as Israel has treated other regional countries, hitting it punitively for violations that do not necessarily include direct attacks on Iranian territory. The United States cannot do anything and told Israel to stand down. Trump begged Iran to stop and excused the attack.
💥 Iran shocked Washington by refusing to tolerate ceasefire violations. When the U.S. struck a radio tower on Qeshm Island, Iran devastated a terminal at Kuwait Airport and attacked Bahrain, signaling that for every bullet it will respond with many.
🤔 Israel faces a dilemma of either clashing with the U.S. president or letting Iran entrench a new equation that curtails Israeli freedom of action against Hezbollah. Iran is far from deterred and projects high confidence.
Iranian funds blocked.
💬 A military adviser to Iran’s supreme leader said Trump must break the impasse and called for the release of about 24 billion dollars in frozen Iranian assets. The US is considering using those assets for Gulf reconstruction instead.
🔄 The U.S. could redirect Iranian assets to Gulf allies for reconstruction, a source said. Treasury Secretary Bessent has directed a team to assess costs of damage inflicted by Iran, and the U.S. will consider using Iranian assets for future repairs as well. This comes after an Iranian adviser said a peace deal hinged on the release of $24 billion in frozen Iranian assets.
🛢️ Iran seeks access to oil revenue, sanctions waivers on crude exports, the lifting of the U.S. blockade on its ports, and leverage over the Strait of Hormuz. Iran has effectively blocked the strait, which carried about a fifth of global oil traffic before the war.
📈 OPEC+ is set to agree on another output increase even though the war prevents some members from pumping more.
The war’s impact on airlines.
📉 Global airline profits are expected to halve in 2026. Net profits will fall from 45 billion dollars to 23 billion dollars, with margins shrinking from 4.2 percent to 2.0 percent, according to IATA.
⛽ Surging fuel costs are adding a collective 100 billion dollars to airlines’ fuel bills this year. Average jet fuel prices are forecast to be 70 percent higher than last year. Jet fuel costs jumped 103 percent in March compared to the previous month. By early June, prices were still 62.4 percent higher year-on-year. U.S. carriers alone spent 5.06 billion dollars on fuel in March, up 56.4 percent from February and 30 percent more than a year earlier.
🧭 Travel demand remains resilient and airlines are raising fares, but growth will inevitably slow. European budget carrier EasyJet reported a pre-tax loss of 552 million pounds in its first half, taking on an additional 25 million pounds in fuel costs in March.
🇩🇪 German airline Lufthansa expects to absorb 1.7 billion euros in extra fuel costs this year, describing the war as posing enormous challenges.
💼 Ryanair hedged 80 percent of its summer fuel and saw profit after tax rise 40 percent. Its CEO warned that if jet fuel prices remain at 150 dollars a barrel into the summer, European airline failures will occur, which he said would eventually benefit Ryanair’s business.
Trade War Update.
🧾 The Pentagon has added several Chinese tech firms, including Alibaba and Baidu, to its list of entities believed to assist the Chinese military. These actions highlight ongoing tensions in U.S.-China relations and security concerns regarding Chinese technology.
🔬 Other companies added include biotech firm WuXi AppTec and robotics maker Unitree. While the designations do not impose formal sanctions, they may influence U.S. firms working with the Pentagon.
⚖️ Both Alibaba and Baidu have disputed the designations, claiming they will seek removal from the list. Some Chinese companies have previously challenged similar listings in court.
📉 Alibaba’s stock price has dropped by 10% since last week.
China is growing along with AI fever.
🚢 China’s exports grew significantly in May, driven by strong demand for semiconductors, cars, and high-tech products related to the AI boom. In particular, chip prices soared, boosting integrated circuit exports by 111% for the month.
📈 Exports increased by 19.4% compared to the previous year, surpassing both April’s 14.1% growth and economists’ forecast of 15%. Imports also rose, climbing 27.4%, exceeding the anticipated 25%.
⚠️ Despite a robust export performance, concerns remain about China’s reliance on external demand, as new export orders fell sharply from their previous peak. China’s trade surplus in May was $105.43 billion, increasing from the month prior. International pressure mounts for China to enhance domestic consumption amid fears of trade friction with major partners.
Tension in the Japanese bond market.
🏦 The Bank of Japan (BOJ) will consider pausing its bond taper next fiscal year as it reviews its quantitative tightening (QT) plan, which is currently set to last until March 2025. The board is divided, with some members advocating for a pause to reduce investor anxiety, while others want to continue decreasing bond purchases to manage the BOJ’s large balance sheet.
📅 At their upcoming meeting on June 15-16, the BOJ will discuss its bond taper, which currently reduces monthly purchases by 200 billion yen ($13 billion). The BOJ could decide to maintain this pace of buying into fiscal 2027 or switch to a more open-ended plan.
📊 Currently, the BOJ holds about 530 trillion yen in government bonds, owning 49% of all issued. Bond runoff from maturing bonds will naturally decrease its holdings by up to 50 trillion yen yearly. The BOJ plans to raise its short-term policy rate to 1% from 0.75%. Some board members show preference for steady normalization amid market volatility and rising debt challenges.
Korea is growing above expectations.
📈 South Korea’s economy grew 1.8% in the first quarter of 2026, stronger than the previously estimated 1.7%. This growth was reported by the Bank of Korea based on revised central bank data. The growth was measured from January to March compared to the previous three months.
Market View.
📊 The consolidation of the bullish rebound in US futures continues, but without much euphoria. Mini S&P 500 futures appear to be stabilising around the 7,435-point area, while Nasdaq 100 futures are doing so around the 29,635-point area.
💱 The US Dollar Index (DXY) is pulling back, cooling off and falling to around 99.90 points. This has given some respite to the major pairs against the dollar: EUR/USD is approaching 1.1550, while GBP/USD is moving towards 1.3375.
📉 In Europe, yesterday’s optimistic opening failed during the session, and we are at levels below yesterday’s highs, with DAX 40 futures trading at 24,650 points and Euro Stoxx 50 futures trading at 6,070 points.
🛢️ Crude oil has calmed, with spot Brent trading around $93.20 per barrel, but it leaves potentially bullish patterns should it rise again towards $98.
🥇 Gold futures fell below $4,300 per ounce on Monday but rebounded to the current $4,360 per ounce.
₿ Bitcoin is at $63,300.
