HFM
Well-known member
Date: 16th June 2025.
Geopolitical Tensions Ease Slightly as Israel-Iran Conflict Enters Day Four.
Trading Leveraged products is Risky
Geopolitical Tensions Ease Slightly as Israel-Iran Conflict Enters Day Four
Tensions between Israel and Iran persisted into a fourth consecutive day on Monday, despite global appeals for restraint. The ongoing conflict has deepened following a series of reciprocal strikes. Iran launched a missile barrage that reportedly killed five in Israel after Israeli forces targeted nuclear and military infrastructure in central Iran over the weekend. The Israeli military confirmed it carried out a widespread offensive on Sunday, striking Iran’s Revolutionary Guard, the Quds Force, and army assets in Tehran.
Iranian President Masoud Pezeshkian, speaking in parliament, urged for national unity and reiterated Iran's commitment to its nuclear ambitions, even as diplomatic efforts intensified on the sidelines of the G7 summit in Canada.
Markets initially reacted sharply to the escalating crisis, with oil prices spiking up to 5.5% to $78.32 a barrel before retracing gains. Brent settled near $75, and WTI hovered around $74, as traders assessed the risk of supply disruption. Israel's strike on Iran’s South Pars gas field temporarily halted a production platform, adding to energy market jitters. However, analysts note the greater threat lies in the Strait of Hormuz, a crucial chokepoint through which nearly 20% of the world’s oil flows. Any Iranian attempt to block the waterway could trigger a dramatic surge in energy prices.
Despite these concerns, some analysts remain cautious. ‘Unless the Strait of Hormuz is closed or Houthi forces in Yemen intensify attacks on shipping, we don’t expect another significant leg higher in crude,’ said Robert Rennie of Westpac Banking Corp.
Volatility has spread beyond commodities. Oil spiked more than 13% on Friday before stabilizing, while gold initially rallied on safe-haven demand. However, markets appear to be dialling back risk premiums. Gold prices have slipped 0.6% to $3,410 on Monday, reflecting reduced appetite for safety.
Safe Haven Flows Retreat on Tentative Hopes of De-escalation
The decline in gold is partly attributed to signs that Iran may be open to diplomacy. Iran’s Foreign Minister stated the country would consider returning to talks if Israeli strikes cease. This has prompted a retreat in safe-haven assets, and investors are beginning to discount the likelihood of a broader regional war — at least for now. While the geopolitical backdrop remains fragile, markets seem to be shifting focus back to macro fundamentals.
Stocks Rebound as Risk Sentiment Stabilizes
European equities moved higher, with:
* Euro Stoxx 50 up 0.4%
* Germany's DAX gaining 0.4%
* France’s CAC 40 advancing 0.5%
* UK’s FTSE 100 up 0.2%
* Spain’s IBEX climbing 0.7%
* Italy’s FTSE MIB rising 0.6%
US futures also reflected cautious optimism, with S&P 500 futures rising 0.5%. The market appears to be moving past last week's geopolitical headlines, highlighting its tendency to quickly refocus on the next catalyst.
Macro Outlook: Central Banks in Focus Amid Rising Uncertainty
The Israel-Iran conflict is overshadowing a week heavy with central bank decisions. The FOMC, Bank of England, and others are expected to hold rates steady. While softer U.S. inflation prints over recent months gave the Fed room to pause, the conflict introduces a new inflationary risk via higher energy costs. Fed Chair Jerome Powell is unlikely to shift to a more dovish stance despite market hopes, as rising oil prices and geopolitical uncertainty may reinforce caution.
Key attention will be on the Fed’s Summary of Economic Projections (SEP), which could show upward tweaks to growth but limited changes elsewhere. The ECB, meanwhile, remains on track to hold rates in July, though escalating geopolitical risks could sway sentiment. In the UK, the BoE is also expected to stay on hold despite easing wage growth, with inflation expectations still running hot.
Switzerland may deliver another 25 bp rate cut amid deflationary pressures and a strong franc, though further FX interventions remain unlikely due to U.S. sensitivities.
Asia-Pacific Outlook: Quiet on Policy, Watchful on Trade
Central banks in Japan, Indonesia, Taiwan, and the Philippines are expected to maintain current policy stances this week, except for the Philippines, which may opt for a 25 bp cut. Japan’s BoJ is likely to keep its policy rate unchanged at 0.50% and stick with QT plans. Upcoming data on trade, machine orders, and CPI will be closely watched, though tariff uncertainties continue to cloud the outlook.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Andria Pichidi
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Geopolitical Tensions Ease Slightly as Israel-Iran Conflict Enters Day Four.
Trading Leveraged products is Risky
Geopolitical Tensions Ease Slightly as Israel-Iran Conflict Enters Day Four
Tensions between Israel and Iran persisted into a fourth consecutive day on Monday, despite global appeals for restraint. The ongoing conflict has deepened following a series of reciprocal strikes. Iran launched a missile barrage that reportedly killed five in Israel after Israeli forces targeted nuclear and military infrastructure in central Iran over the weekend. The Israeli military confirmed it carried out a widespread offensive on Sunday, striking Iran’s Revolutionary Guard, the Quds Force, and army assets in Tehran.
Iranian President Masoud Pezeshkian, speaking in parliament, urged for national unity and reiterated Iran's commitment to its nuclear ambitions, even as diplomatic efforts intensified on the sidelines of the G7 summit in Canada.
Markets initially reacted sharply to the escalating crisis, with oil prices spiking up to 5.5% to $78.32 a barrel before retracing gains. Brent settled near $75, and WTI hovered around $74, as traders assessed the risk of supply disruption. Israel's strike on Iran’s South Pars gas field temporarily halted a production platform, adding to energy market jitters. However, analysts note the greater threat lies in the Strait of Hormuz, a crucial chokepoint through which nearly 20% of the world’s oil flows. Any Iranian attempt to block the waterway could trigger a dramatic surge in energy prices.
Despite these concerns, some analysts remain cautious. ‘Unless the Strait of Hormuz is closed or Houthi forces in Yemen intensify attacks on shipping, we don’t expect another significant leg higher in crude,’ said Robert Rennie of Westpac Banking Corp.
Volatility has spread beyond commodities. Oil spiked more than 13% on Friday before stabilizing, while gold initially rallied on safe-haven demand. However, markets appear to be dialling back risk premiums. Gold prices have slipped 0.6% to $3,410 on Monday, reflecting reduced appetite for safety.
Safe Haven Flows Retreat on Tentative Hopes of De-escalation
The decline in gold is partly attributed to signs that Iran may be open to diplomacy. Iran’s Foreign Minister stated the country would consider returning to talks if Israeli strikes cease. This has prompted a retreat in safe-haven assets, and investors are beginning to discount the likelihood of a broader regional war — at least for now. While the geopolitical backdrop remains fragile, markets seem to be shifting focus back to macro fundamentals.
Stocks Rebound as Risk Sentiment Stabilizes
European equities moved higher, with:
* Euro Stoxx 50 up 0.4%
* Germany's DAX gaining 0.4%
* France’s CAC 40 advancing 0.5%
* UK’s FTSE 100 up 0.2%
* Spain’s IBEX climbing 0.7%
* Italy’s FTSE MIB rising 0.6%
US futures also reflected cautious optimism, with S&P 500 futures rising 0.5%. The market appears to be moving past last week's geopolitical headlines, highlighting its tendency to quickly refocus on the next catalyst.
Macro Outlook: Central Banks in Focus Amid Rising Uncertainty
The Israel-Iran conflict is overshadowing a week heavy with central bank decisions. The FOMC, Bank of England, and others are expected to hold rates steady. While softer U.S. inflation prints over recent months gave the Fed room to pause, the conflict introduces a new inflationary risk via higher energy costs. Fed Chair Jerome Powell is unlikely to shift to a more dovish stance despite market hopes, as rising oil prices and geopolitical uncertainty may reinforce caution.
Key attention will be on the Fed’s Summary of Economic Projections (SEP), which could show upward tweaks to growth but limited changes elsewhere. The ECB, meanwhile, remains on track to hold rates in July, though escalating geopolitical risks could sway sentiment. In the UK, the BoE is also expected to stay on hold despite easing wage growth, with inflation expectations still running hot.
Switzerland may deliver another 25 bp rate cut amid deflationary pressures and a strong franc, though further FX interventions remain unlikely due to U.S. sensitivities.
Asia-Pacific Outlook: Quiet on Policy, Watchful on Trade
Central banks in Japan, Indonesia, Taiwan, and the Philippines are expected to maintain current policy stances this week, except for the Philippines, which may opt for a 25 bp cut. Japan’s BoJ is likely to keep its policy rate unchanged at 0.50% and stick with QT plans. Upcoming data on trade, machine orders, and CPI will be closely watched, though tariff uncertainties continue to cloud the outlook.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Andria Pichidi
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
