Market drivers and catalysts
Equities: Oracle surges, Boeing drops, Trump tariffs return, Israel-Iran risk
Volatility: VIX +4% to 18; defensive hedging rises
Digital assets: Bitcoin/ETH slide; IBIT, ETHA dip but inflows steady
Fixed Income: Yields drop on weak US labor market data, geopolitical tensions
Currencies: USD fights back from yesterday’s sell-off on geopolitical tensions.
Commodities: Crude spikes and gold sees haven demand as Israel attacks Iran
Macro events: US Jun. Preliminary University of Michigan Sentiment
Macro data and headlines
Israel launched a series of attacks on Iran, targeting its nuclear program and ballistic missile sites. Israeli Minister of Defense Israel Katz has also declared a special state of emergency throughout the entire state of Israel, anticipating some retaliation from Iran with reports saying Iran has launched over 100 drones in the last few hours.
Crude oil prices spiked as much as 13%, the biggest jump since 2022, while gold rose above USD 3400, before prices retraced some of their early gains amid reports no crude production or storage facilities had been hit in the Israeli strike. The region accounts for a third of global crude production Strait of Hormuz the world’s most critical oil transit chokepoint that sees more than 20 million barrels of crude pass through daily.
US President Trump said that he may “have to force” Fed Chair Powell to cut interest rates, calling the Fed Reserve Chair a “numbskull” for not cutting rates. Earlier this week, Vice President JD Vance called the Fed not lower rates more as “monetary malpractice”. After yesterday’s weak jobless claims data, the odds for a rate cut at next week’s FOMC meeting remain at virtually zero, while odds of a July cut have shifted higher to slightly above 25%.
US initial jobless claims stayed at 248,000 in early June, above the expected 240,000, while continued claims jumped to 1.956 million, the highest since the end of 2021 and together with a slowdown in hiring, it suggests that out-of-work people are struggling to find employment
US producer prices increased 0.1% in May 2025, below the forecasted 0.2%. Goods prices rose 0.2%, with tobacco up 0.9%, while jet fuel fell 8.2%. Service costs edged up 0.1%, with machinery and vehicle wholesaling margins rising 2.9%.
Macro calendar highlights (times in GMT)
0600 – Germany and Sweden May Final CPI
0645 – France Final May CPI
0900 – Eurozone April Industrial Production
1400 – US Preliminary June University of Michigan Sentiment
Earnings events
Next week:
Monday: Lennar
Wednesday: Carnival Corporation
Thursday: Accenture, Kroger, Darden Restaurants
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: US stocks ended higher on Thursday, led by a 13% jump in Oracle after upbeat cloud and AI forecasts, offsetting Boeing’s 4.7% drop following a fatal Dreamliner crash. Softer inflation data (PPI +0.1% MoM) boosted hopes for Fed rate cuts this year. After the close, futures slid over 1% as Israel launched strikes on Iran, triggering a fresh wave of risk aversion. Investors now watch for today’s Michigan consumer sentiment data and further Middle East headlines.
Europe: European stocks fell Thursday, with the STOXX 50 down 1.3%, as new US tariff threats resurfaced and Trump said letters outlining unilateral tariff rates would go out within weeks. Corporate weakness in Deutsche Telekom, ASML, Inditex, and Siemens dragged indices lower. On Friday, futures pointed sharply lower (-1.7% Euro Stoxx 50) after Israel’s attack on Iran, with investors bracing for heightened volatility and turning to safe-haven assets.
UK: The FTSE 100 rose 0.2% on Thursday to record highs, helped by energy and pharma stocks. Weak UK GDP data (-0.3% in April) lifted hopes for a Bank of England rate cut, while trade data showed a widening deficit. Investors favored UK stocks as an alternative to US markets amid concerns about Trump’s trade policies. Friday’s open is set to be risk-off, in line with global sentiment after Israel’s Iran strike.
Asia: Asian stocks tumbled Friday after Israel’s strikes on Iran triggered a broad risk-off move. Japan’s Nikkei fell 1.2%, Korea’s KOSPI slid 1.3%, and Hong Kong’s Hang Seng dropped 0.8%. Investors rushed to safe havens as regional tensions flared and President Trump warned of higher auto tariffs. Oil and gold rallied, while tech and export shares retreated across the region.
Volatility
Volatility picked up going towards the weekend. The VIX climbed 4% to 18.0, the highest in a month, as geopolitical risks resurfaced. Short-term VIX measures (VIX1D, VIX9D) also rose, showing investors buying protection ahead of a tense weekend. Despite the jump, volatility remains well below April’s panic highs, suggesting a defensive move rather than outright panic.
Digital Assets
Crypto markets fell in tandem with equities on renewed geopolitical risk. Bitcoin slid 1.4% to $104,200 and Ethereum dropped nearly 5% to $2,510. Major ETFs like BlackRock’s IBIT (-1.8%) and iShares’ ETHA (-4.3%) dipped but remain resilient year-to-date. The risk-off shift hit crypto stocks such as Coinbase and MicroStrategy, yet steady ETF inflows hint at continued institutional interest even as volatility rises.
Fixed Income
US Treasury yields fell all along the curve again yesterday on another weak set of jobless claims data and after the US treasury saw strong demand at its auction of USD 22 billion of its longest dated 30-year treasury bonds yesterday. The Israel attacks against Iran overnight triggered further safe haven seeking in US treasuries. The US 10-year yield benchmark trades just below 4.33% in late Asian hours, near its lowest level since early May.
Japanese government bond yields fell sharply overnight as the market saw global safe haven seeking in the wake of Israel’s attacks on Iran. The 10-year JGB yield dipped 5 basis points and traded near 1.40% in late Tokyo hours, the lowest in a month. The Bank of Japan meets next Tuesday.
Commodities
Crude oil prices spiked as much as 13% to a USD 78.50 high in Brent before retracing some of their early gains amid reports no crude production or storage facilities had been hit in the Israeli strike. However, concerns remain over a disruption in oil supply from a region that accounts for a third of global crude production, while the Strait of Hormuz—the world’s most critical oil transit chokepoint—sees more than 20 million barrels of crude passing through daily.
- Gold rose together with the dollar following the Israeli attack in a classic safe-haven move, while recent in-demand metals such as silver and platinum struggled to keep up. Whether the attack was the spark that was needed to reignite gold and drive a fresh push towards and above USD 3,500, remains to be seen. However, together with central bank demand, fiscal debt concerns, and softening US economic data pointing to rate cuts, it seems to be the path of least resistance.
The Bloomberg Commodity Index, tracked by several ETF providers, trades higher for a second week to a year-to-date gain of 8.3%, with the latest gains being driven by the mentioned strong gains in crude oil and gold, and only partly offset by broad, ample supply-led losses across the agriculture sector.
Currencies
The US dollar sold off yesterday on another set of weak weekly jobless claims and continuing claims data as noted above, ending EURUSD well above 1.1600 before a correction set in, one that deepened overnight suddenly as the risk-off move sparked by Israel’s attacks on Iran triggered a sharp USD rally overnight.
- The JPY first rose on the weak risk sentiment contagion sparked overnight by Israel’s strikes in Iran, with USDJPY dipping below 143.00 before bouncing back late in the Asian session as USD strength won out.
- EURCHF dropped back well below the key 0.9400 level that the pair had rallied above as geopolitical tensions triggered widespread unease and safe haven seeking.
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