Oil prices jumped to $75 per barrel. Israel attacked Iran’s nuclear infrastructure

At the end of the trading day, the Dow Jones Index (US30) rose by 0.24%. The S&P500 (US500) Index rose by 0.38%. The Nasdaq (US100) technology index closed higher by 0.24%, helped by a 13% rise in Oracle shares after strong quarterly results and an encouraging forecast for cloud technology growth driven by demand for AI. However, Boeing shares fell 4.7% after the fatal crash of Air India’s Dreamliner aircraft, which put pressure on the Dow Jones index.

Economic data showed further signs of weakening inflation: the producer price index rose by only 0.1% in May, raising hopes for a Federal Reserve rate cut this year. President Trump reiterated that he insists on a significant rate cut and confirmed plans to send letters regarding tariffs to US trading partners, expressing confidence that trade relations with China will be normalized. Initial jobless claims in the US for the first week of June remained at 248,000, unchanged from the previous week’s revised figure and defying market expectations of a decline to 240,000. The figure remained at its highest level since early October 2024, signaling the first signs of easing in the labor market amid ongoing economic uncertainty.

In June, the Canadian dollar rose to around 1.36 per US dollar, its strongest level in eight months, primarily due to the weakening of the US dollar resulting from lower-than-expected inflation in the US and a reassessment of Fed policy. Domestically, the Bank of Canada’s decision in June to hold rates steady, abandoning its tightening bias, underscored a shift toward neutrality, narrowing the policy gap with the Fed and boosting the loonie.

Bitcoin fell to around US$103,700, continuing the losses of recent sessions and reaching a two-week low, as escalating geopolitical tensions and economic uncertainty triggered risk aversion. Israel’s preemptive strike on Iran and its declaration of a state of emergency increased the risk of imminent Iranian retaliation. In addition to broader market risks, President Donald Trump threatened new tariffs as the deadline for trade deals approached in early July.

European stock markets were mostly lower yesterday. The German DAX (DE40) fell by 0.74%, the French CAC 40 (FR40) closed down 0.14%, the Spanish IBEX35 (ES35) lost 0.32%, and the British FTSE 100 (UK100) closed 0.23%. President Donald Trump announced plans to send letters to major trading partners within a week or two, specifying unilateral tariffs that would be imposed. This move added uncertainty to global trade dynamics. However, Treasury Secretary Scott Bessent said that the 90-day pause on reciprocal tariffs could be extended for countries showing “goodwill” in negotiations.

On Friday, WTI crude oil futures jumped to around $75 per barrel, reaching their highest level since January, driven by fears of supply disruptions after Israel launched a preemptive strike on Iran. The prospect of a wider Middle East conflict threatens to disrupt the Strait of Hormuz, a key route through which about 20% of the world’s oil flows.

Asian markets declined yesterday. Japan’s Nikkei 225 (JP225) fell by 0.65%, China’s FTSE China A50 (CHA50) lost 0.25%, Hong Kong’s Hang Seng (HK50) fell by 1.36%, and Australia’s ASX 200 (AU200) showed a negative result of 0.31% on Thursday.

The Australian dollar fell to $0.649 on Friday, reversing the previous session’s gains amid weakening risk sentiment amid escalating tensions in the Middle East. The sharp escalation followed Israel’s preemptive strike on Iran, targeting Tehran’s nuclear program and vowing to continue operations until the threat is neutralized. This move fueled fears of retaliation by Iran and a broader regional conflict, putting pressure on risk-sensitive currencies such as the Australian dollar.