Markets and Geopolitical Tensions:
• Wall Street opened lower as fighting between Israel and Iran entered its fifth day, raising fears of a wider Middle East conflict and reducing risk appetite.
• U.S. President Donald Trump urged evacuations from Tehran and called for a "real end" to the nuclear dispute, while Israeli officials issued stark warnings against Iran’s leadership.
• Oil and gold prices rose, with U.S. crude up 2.26% and Brent up 2.54%, as markets reacted to heightened geopolitical risks.
• U.S. indices fell:
- Dow: -0.19%
- S&P 500: -0.26%
- Nasdaq: -0.36%
Investor Sentiment and Safe-Havens:
• Investors are cautious amid central bank meetings this week (Federal Reserve, BOJ, BOE, SNB).
• Safe-haven assets benefited:
- U.S. Treasury yields dropped slightly
- Gold edged up by 0.14%
- European stocks also declined; STOXX 600 fell nearly 1%.
Volatility and Oil Market Observations:
• No oil supply disruptions yet, though a ship collision in the Gulf of Oman caused temporary concern.
• The VIX index rose to 20.8, reflecting some tension but far below crisis levels.
Central Bank Watch:
• Fed is expected to hold interest rates steady on Wednesday, but markets await Jerome Powell’s guidance amid ongoing trade tensions and Trump's criticism.
• Traders anticipate 1–2 rate cuts by year-end.
• BOJ kept its short-term rate at 0.5%, as expected, and will slow its bond tapering to avoid market disruption.
• The yen weakened slightly to 144.91 per dollar.
Trade Talks:
• G7 summit saw no breakthroughs in trade negotiations with Japan and only partial progress with the UK (steel/aluminum tariffs unresolved).
