2025-06-23 10:46
LONDON, June 23 (Reuters) - What matters in U.S. and global markets today I'm excited to announce that I'm now part of Reuters Open Interest (ROI) , opens new tab, an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website , opens new tab, and you can follow us on LinkedIn , opens new tab and X. , opens new tab Sign up here. In this latest round of Middle East violence, the oil price has been remarkable as much for what it hasn't done as for what it has. Oil prices initially rose this morning following the U.S. strike on Iran over the weekend, but crude has since given back all these gains. I'll discuss this and the rest of the market news below, and then in today’s column, I ask why markets are remaining surprisingly calm despite mounting U.S. debt concerns. Today's Market Minute * Iran said on Monday that the U.S. attack on its nuclear sites expanded the range of legitimate targets for its armed forces and called U.S. President Donald Trump a "gambler" for joining Israel's military campaign against the Islamic Republic. * The U.S. bombing injected fresh uncertainty into the outlook for inflation and economic activity at the start of a week chock full of new economic data and central banker commentary, including two days of Congressional testimony from Federal Reserve Chair Jerome Powell. * Utilities in the developed world are stressing over how to keep up with demand from data centres and artificial intelligence searches. But globally, keeping people cool is likely to be a much bigger drain on electricity grids and a more pressing power sector challenge. Read the latest from ROI global energy transition columnist Gavin Maguire. * The escalation of the Middle East conflict could lead Tehran to disrupt vital exports of oil and gas from the region, sparking a surge in energy prices. But as ROI energy columnist Ron Bousso says, history tells us that any disruption would likely be short-lived. * Several recent global developments have sparked some of the highest levels of uncertainty in decades. ROI outside contributor Joachim Klement claims equity investors seeking clarity should be careful what they wish for. Oil keeps calm, MidEast conflict carries on With global stock and bond markets using crude as a lodestar for how they react to the Iran crisis, the remarkably quick reverse and decline in U.S. oil prices on Monday have seen U.S. and European equities rally following the weekend events. Wall Street futures were up about 0.25% ahead of Monday's bell. European (.STOXXE) , opens new tab and Chinese (.CSI300) , opens new tab, (.HSI) , opens new tab were higher too, with Japan's Nikkei (.N225) , opens new tab bucking the trend even as the yen weakened. Mostly due to the yen slide, the dollar index (.DXY) , opens new tab was firmer. U.S. President Donald Trump said he had "obliterated" Iran's main nuclear sites in strikes over the weekend, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself. Trump then openly hinted at 'regime change' in his social media posts on Sunday. U.S. crude prices initially jumped above $78 per barrel to their highest since January, but quickly fell back below Friday's close to trade below $74 - more than $6 below the high for this year and down 11% on levels seen a year ago. Brent prices are down on the day too. While the escalating conflict surrounding Iran has turned unpredictable, it happens in a market where global space oil production capacity is running in excess of 4 million barrels a day - an oversupply expected to persist through the end of next year at least. What's more, outsize bets on the direction for oil linked to the outcome of the Iran war are frustrated by numerous binary outcomes - including both the survival of the Tehran government and even possible mining of the Straits of Hormuz. While the latter could stymie shipping in the region for a bit, it's not clear how long it could be enforced. With global demand set to ebb later this year, due in part due to the growth-dampening effects of U.S. trade tariffs, and U.S. production set to increase, speculative oil price punts are very risky. With oil prices still largely under wraps, the fallout for U.S. Treasuries is similarly limited. With one eye on Federal Reserve chief Jerome Powell's semi-annual Congressional testimony on Tuesday and series of debt auctions during the week, 10-year yields remained stuck in recent ranges about 4.4%. Trump on Friday again floated the idea of firing Powell. "I don't know why the Board doesn't override (Powell)," Trump wrote in a lengthy post on Truth Social criticizing Fed policy. "Maybe, just maybe, I'll have to change my mind about firing him? But regardless, his Term ends shortly." San Francisco Fed President Mary Daly said on Sunday that U.S. central bank should consider giving less forward guidance about its monetary policy intentions, particularly in uncertain times. "Words have power, which is a great tool. But words can be harder to reverse than the interest rate," she said. The economic data calendar homes in on June business surveys, with the flash versions of U.S. soundings from S&P Global due out later in the day. Overall euro zone business activity expanded only modestly in June, with a small improvement in the dominant services industry offsetting more downbeat manufacturing. The services PMI nudged up to sit right on the break-even 50 mark up from May's final reading of 49.7. Optimism among services firms increased and the business expectations index bounced to a four-month high of 57.9 from 56.2. European Central Bank boss Christine Lagarde testifies at the European Parliament later in the day. Economic surprise indexes, capturing how incoming economic readings are above or below expectations overall, show a sharp divergence between Europe and the United States - with the euro zone index at its most positive since May and the U.S. equivalent at its most negative in nine months. Elsewhere, Bitcoin was sharply lower over the weekend, while gold prices also fell back early on Monday. Chart of the day Relatively quick reversals of oil price spikes were largely thanks to the ample spare production capacity - and also due to the fact that any rapid oil price increase curbs demand in turn. The current global oil market certainly has spare capacity. OPEC+, an alliance of producing nations, today holds around 5.7 million barrels per day in excess capacity, of which Saudi Arabia and the United Arab Emirates hold 4.2 million bpd. Although there are concerns about closing of the key Straits of Hormuz waterway, the two Gulf powers could bypass it by oil pipelines. Saudi produces around 9 million bpd and has a crude pipeline that runs from the Abqaiq oilfield on the Gulf coast in the east to the Red Sea port city of Yanbu in the west. The UAE, which produced 3.3 million bpd of crude oil in April, has a 1.5 million bpd pipeline linking its onshore oilfields to the Fujairah oil terminal that is east of the Strait of Hormuz. Today's events to watch * Flash U.S. June business surveys from S&PGlobal (0945EDT) May existing home sales (1000EDT) * Federal Reserve Board Governor Christopher Waller, Fed Board Governor Adriana Kugler, Fed Vice Chair for Supervision Michelle Bowman, and Chicago Fed President Austan Goolsbee all speak. European Central Bank President Christine Lagarde speaks to European Parliament (0800EDT) * EU-Canada summit takes place in Brussels * U.S. Treasury sells $58 billion of 3-year notes Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. https://www.reuters.com/business/finance/global-markets-view-usa-2025-06-23/
2025-06-23 10:24
MUMBAI, June 23 (Reuters) - The Indian rupee declined on Monday alongside Asian currencies, as investors turned to safe-havens such as the U.S. dollar amid escalating tensions in the Middle East, although a retreat in crude oil prices helped cushion their losses. Market participants remained focused on Iran's response to U.S. attacks on its nuclear sites. Sign up here. The rupee closed at 86.75 against the U.S. dollar, down 0.2% from its close at 86.5850 in the previous session. Brent crude oil futures hit a five-month peak of $81.40 per barrel earlier in the day but pared gains to be last quoted at $77.4 per barrel. Iran has repeatedly threatened to retaliate after the U.S. struck the county's nuclear sites over the weekend, raising fears that the retaliation may include a closure of the Strait of Hormuz through which roughly a fifth of global crude supply flows. The dollar index was up rose nearly 0.4% to touch a near-two week high of 99.4 while Asian currencies were down between 0.2% and 1.4%. In case the "geopolitical risk and oil spike proves to be only temporary, we think markets will rapidly default back to preferring strategic USD shorts on the back of US-generated bearish drivers," ING Bank said in a note. Global investors treaded with caution on Monday, with most equity gauges in Asia and Europe trading in the red but not suffering steep losses. India's benchmarks, the BSE Sensex (.BSESN) , opens new tab and the Nifty 50 (.NSEI) , opens new tab ended lower by about 0.6% each. U.S. equity futures, meanwhile, nudged higher. The relatively muted reaction in oil prices is a source of comfort for the rupee, a trader at a state-run bank said. However, a fresh round of escalation in the Middle East could push the rupee below the psychologically important 87 level, the trader added. Market participants reckon that the Reserve Bank of India is likely to step in to curb excessive volatility spurred by geopolitical developments. https://www.reuters.com/world/india/rupee-weakens-alongside-asian-peers-oil-pullback-cushions-losses-2025-06-23/
2025-06-23 08:58
TOKYO, June 23 (Reuters) - The Japanese yen, normally one of the most sought after safe havens in times of geopolitical stress, has dropped 2.4% against the U.S. dollar and 1.4% against the Swiss franc since Israel launched missile attacks against Iranian nuclear and military targets on June 13. CONTEXT Japan imports almost all its oil, meaning the spike in crude since the start of the conflict threatens to worsen the country's trade balance, diminishing the yen's appeal. Sign up here. When Russia invaded Ukraine on February 24, 2022, the yen weakened against the dollar on the same day and then lost some 11.5% over March and April. WHY IT'S IMPORTANT Speculative positioning is still heavily skewed towards a stronger yen, potentially foreshadowing a major shift by hedge funds as they cover those positions. The yen exchange rate has a knock-on effect for Japanese stocks as well, with a weaker yen tending to support the market because it increases the value of overseas revenue for the country's heavyweight exporters. However, the effect may be short-lived because of the jump in manufacturing costs from higher energy prices. For Japan's unpopular government too, a weak yen fans inflation when people are already struggling with higher prices, particularly for rice. That's not a good omen ahead of crucial upper house elections next month. KEY QUOTES "A rise in crude oil prices causes a deterioration not only in Japan's trade balance but also its terms of trade, so it fundamentally acts to weaken the yen," Citi analysts wrote in a recent client note, while reiterating forecasts for the yen to weaken to 150 per dollar by September. With the Bank of Japan also striking a dovish posture at last week's policy meeting, the compounded downward pressure on the yen from oil's rally could be amplified, they said. https://www.reuters.com/business/japans-yen-sinks-spike-crude-oil-overpowers-safe-haven-appeal-2025-06-23/
2025-06-23 08:52
LONDON, June 23 (Reuters) - Hedge fund leverage hit a five-year high last week, with speculators buying banks, trading companies and insurance firms, Goldman Sachs data (GS.N) , opens new tab showed, after U.S. interest rates held steady and just before U.S. attacks on Iran's nuclear sites. The U.S. Federal Reserve held interest rates steady on Wednesday last week and indicated they were in no rush to cut interest rates. Sign up here. The U.S. attacked Iranian nuclear sites on Saturday, which sent oil prices towards a year-high on Monday, with further expected price gains mounting on fears that an Iranian retaliation may include a closure of the Strait of Hormuz, through which roughly a fifth of global crude supply flows. Gross leverage, a gauge of how much hedge funds are trading, rose to roughly 294%, the most since 2020. Leverage was at 271.8% at the start of the year. Hedge funds upped their short positions on Europe and Asia, while remaining modestly long on North American stock, according to the note to clients from Goldman Sachs prime brokerage data. A short position expects a stock price to fall, whereas a long position bets it will rise. Financial stocks including banks, insurance companies and trading firms featured as one of the most popular stock sectors last week. The balance sheets of these firms benefit from higher rates, particularly banks, which collect payments when they lend money to corporates and consumers. Hedge funds bought financial firms' stock in North America and Europe, but held a slight short in these shares in Asia, the Goldman Sachs note showed. Hedge funds ended the week with a net long position in energy stocks as well, it said. Global stock picking returns ticked up over 4% so far this year, with returns in Europe surpassing 10%. Global systematic returns reached almost 12%, the note said. https://www.reuters.com/business/finance/hedge-flow-hedge-fund-leverage-reaches-five-year-high-buying-bank-stocks-goldman-2025-06-23/
2025-06-23 07:46
BRUSSELS, June 23 (Reuters) - An Iranian closure of the Strait of Hormuz would be dangerous and "not good for anybody", the European Union's top diplomat said on Monday. "The concerns of retaliation and this war escalating are huge, especially closing of the Strait of Hormuz by Iran is something that would be extremely dangerous and not good for anybody," Kaja Kallas told reporters ahead of a meeting with EU foreign ministers. Sign up here. Iran's Press TV reported on Sunday that Iran's Supreme National Security Council needed to make a final decision on whether to close the strait, after parliament was reported to back the measure. About 20% of global oil and gas demand flows through the channel. https://www.reuters.com/world/middle-east/any-iranian-closure-hormuz-strait-would-be-extremely-dangerous-eus-top-diplomat-2025-06-23/
2025-06-23 07:16
ATHENS, June 23 (Reuters) - Greece on Monday declared a state of emergency on Chios island, where hundreds of firefighters have been battling wildfires for a second day as winds further whipped up the blaze, causing power cuts and the evacuation of residents. "The situation since yesterday on the island is quite difficult because we constantly have new fronts and resurgences and the climatic conditions are not favorable," Yiannis Kefalogiannis, the climate crisis and civil protection minister, said upon his arrival in Chios. Sign up here. He confirmed that 170 more firefighters will reinforce 11 teams of about 190 firefighters deployed on the island in the northeastern Aegean Sea, who were trying to prevent the conflagration from spreading to homes and areas known for producing mastiha, a natural resin harvested from mastic trees. Thirty more vehicles will reinforce 38 vehicles already deployed, assisted by 13 helicopters and four water bomber aircraft, Kefalogiannis said. Wind gusts complicated efforts to extinguish the wildfires, which have razed forest and pasture land as they barrel towards the north, west and south of Chios town, the island's capital, causing power cuts and forcing hundreds of villagers to flee to safety. Kefalogiannis said the authorities will investigate the causes of the fires which broke out at different geographical parts of the island. Sitting at Europe's hot southernmost tip, Greece has felt the economic and environmental impact of frequent wildfires in recent years that scientists say have been exacerbated by a fast-changing climate. The country has spent hundreds of millions of euros to compensate households and farmers for damage related to extreme weather and to update firefighting equipment. It has hired a record number of firefighters this year, some 18,000 of them, in anticipation of a challenging fire season. https://www.reuters.com/business/environment/firefighters-battle-wildfires-greeces-chios-island-second-day-2025-06-23/
