Escalation of the US–Iran conflict is once again supporting the rise in oil prices

By the end of the day, the Dow Jones Index (US30) fell by 0.08% (weekly +0.62%). The S&P 500 Index (US500) declined by 3.47% (weekly -1.95%). The technology‑heavy Nasdaq (US100) closed lower by 1.09% (weekly -4.62%). The global economic environment remains heavily influenced by US–Iran negotiations, with the recent increase in energy shipments through the Strait of Hormuz having pushed commodity prices lower, easing concerns about inflation and further Federal Reserve tightening. However, new reports of US strikes near the Strait of Hormuz radically change market dynamics and threaten the fragile ceasefire, potentially restoring a high geopolitical risk premium across global markets.

This week, investor attention will be focused on US labor‑market data, including nonfarm payrolls, unemployment figures, and wage dynamics, as well as manufacturing activity and consumer confidence indicators. These releases will coincide with upcoming speeches by Federal Reserve and Bank of Canada officials at the ECB Forum.

European indices closed lower on Friday. By the end of the day, Germany’s DAX (DE40) fell by 1.29% (weekly -1.46%), France’s CAC 40 (FR40) declined by 0.55% (weekly -0.58%), Spain’s IBEX 35 (ES35) dropped by 0.45% (weekly +0.32%), and the UK’s FTSE 100 (UK100) ended the session down 0.21% (weekly +1.39%). The key event for European markets this week will be the release of fresh inflation data for the eurozone and major regional economies, where a slight slowdown in headline inflation is expected due to cheaper energy, while core inflation remains persistently high. Parallel to this, investor attention is focused on the ECB Forum in Sintra, where leaders of major global central banks will discuss monetary policy prospects. Combined with unemployment statistics for the eurozone, Germany, Italy, and Spain, these discussions will help assess the economy’s resilience to current financial conditions.

On Friday, the Swiss franc (CHF) posted a local rebound against the US dollar, recovering after a recent decline driven by lower inflation expectations and weakening dollar momentum. Nevertheless, the currency remains under pressure due to geopolitical factors: potential de‑escalation in the Middle East could weaken the franc’s status as a safe‑haven asset, while the Swiss National Bank’s (SNB) current monetary stance – maintaining a zero policy rate despite raising inflation expectations – adds further challenges for the currency.

On Monday, crude oil prices (WTI) showed moderate recovery, rising to around $70 per barrel after a recent drop to four‑month lows triggered by escalating US–Iran tensions near the Strait of Hormuz. Despite a series of reciprocal strikes affecting commercial vessels in the Persian Gulf, both sides expressed readiness to pause active hostilities ahead of peace talks scheduled for this week in Doha. Although shipping activity temporarily increased amid hopes for compliance with ceasefire terms, many vessels remain blocked in the region, continuing to affect the stability of energy supplies and price dynamics.

Platinum prices (XPT) fell to $1,600 per ounce, approaching yearly lows amid a broad decline in precious metals triggered by renewed geopolitical tensions in the Middle East. The resurgence of clashes near the Strait of Hormuz erased recent progress in negotiations, causing a sharp spike in oil prices and intensifying inflation concerns. Meanwhile, the persistent strength of the US dollar further limited demand for the metal among holders of other currencies.

On Friday, Japan’s Nikkei 225 (JP225) dropped by 4.15% (weekly -2.40%), China’s FTSE China A50 fell by 3.50% (weekly -4.69%), Hong Kong’s Hang Seng (HK50) declined by 1.76% (weekly -4.79%), while Australia’s ASX 200 (AU200) closed slightly higher at 0.18% (weekly -0.43%). Investor focus in the Asia‑Pacific region is directed toward China’s business activity indicators, where both manufacturing and services sectors are hovering near stagnation, as well as Japan’s Tankan survey, reflecting cautious business sentiment in Q2. Japan is expected to show positive dynamics in retail sales and industrial production amid extremely low unemployment, while Australia’s market will concentrate on central bank meeting minutes and updated trade data pointing to a widening surplus. Other regional economies also face a busy agenda: India is preparing to release its budget and industrial production reports, while South Korea, Vietnam, Indonesia, and the Philippines will publish key statistics on trade, inflation, and GDP.

The People’s Bank of China (PBoC) began the week with a large liquidity injection, providing 157.5 billion yuan through seven‑day reverse repo operations while keeping the key rate at its historic low of 1.4%, confirming the regulator’s commitment to supporting economic growth through accommodative monetary policy. Additionally, to more flexibly manage short‑term liquidity and stabilize interbank conditions, the PBoC deployed a new tool – an overnight reverse repo – injecting an additional 300 billion yuan into the system.

The Australian dollar (AUD) continues to lose ground, falling below the psychological level of 0.690 USD amid geopolitical instability in the Middle East, which undermines investor appetite for risk assets. Despite the temporary ceasefire agreement between the US and Iran and renewed negotiations regarding the Strait of Hormuz, energy prices remain elevated, intensifying concerns about global inflation.