A fragile ceasefire announced by U.S. President Donald Trump in the Middle East has left investors cautiously optimistic. Despite some Iranian rocket fire and an Israeli promise of retaliation, market participants seem to believe that the worst is behind us. While the global stock rally has slowed and crude oil appears to have stabilized, there has yet to be significant reversal of recent market moves. One reason for this market resilience may be the confidence in the security of Iran’s oil infrastructure and the strategic Strait of Hormuz, which remains intact even during heightened tensions.
President Trump, displaying his usual buoyancy on social media, suggested that China could resume purchasing Iranian oil, though the White House quickly clarified that U.S. sanctions had not changed. Trump’s comments have sparked some contradictions, particularly as they contrast with an initial report from his own Defense Intelligence Agency. The report indicated that U.S. airstrikes on Iran’s nuclear facilities had only delayed the country’s capabilities by a month or two, whereas Trump claimed the program was “obliterated.” This raises significant questions regarding the effectiveness of U.S. and Israeli military objectives in the region.
As Trump heads to The Hague for a NATO summit, where defense spending will be a focal point, developments in the Middle East are likely to dominate market discussions. Today’s trading day in Europe promises to be quiet on the corporate and macroeconomic fronts, with U.S. data limited to new home sales. Federal Reserve Chair Jerome Powell is also set to testify before the Senate, following a similar appearance at the House the previous day. In political news from New York City, Zohran Mamdani, a youthful state lawmaker and self-identified democratic socialist, is on the verge of an upset victory in the city’s Democratic mayoral primary against former Governor Andrew Cuomo.
Key points to watch today include the NATO summit, U.S. new home sales for May, and Powell’s testimony before the Senate Banking Committee.