Israel-Iran tensions complicate Fed outlook 16/06/2025

HOT stories for today

US market wrap:

• Heightened geopolitical tensions sparked a sharp downturn on Wall Street Friday, triggering a broad-based sell-off. The Dow Jones Industrial Average plunged over 700 points, while the S&P 500 and Nasdaq each slid more than 1%. The pullback dragged all three major indexes into negative territory for the week, with the Dow down 1.3%, the S&P 500 off 0.4%, and the Nasdaq retreating 0.6%.
• Energy markets also responded swiftly to the flare-up in Middle East hostilities. Crude oil prices surged after Israeli strikes, while gold saw a rally as investors sought refuge in safe-haven assets. The conflict escalated over the weekend, with both Israel and Iran targeting one another’s energy infrastructure—raising fresh concerns about potential disruptions to global supply chains. Of particular concern is Iran’s warning that it may close the Strait of Hormuz, a vital artery for the international oil trade, further fanning fears of market volatility in the days ahead. On the economic front, investors are bracing for key U.S. manufacturing data set to be released Monday morning.

Israel-Iran tensions complicate Fed outlook

• According to Jon Faust, a former adviser to Fed Chair Jerome Powell, rising tensions between Israel and Iran could complicate the Federal Reserve’s outlook. “This is a major wild card,” Faust told MarketWatch, warning that a spike in oil prices and shaken confidence could tip the economy into a downturn. Fed officials meet this week and are expected to hold interest rates steady. T
• he key question, Faust said, is whether Powell signals greater concern about inflation or weakening labor markets. “That will shape policy expectations for the rest of the year.” While March projections included two rate cuts for 2025, Faust said current data could justify anything from zero to two. He sees a 50/50 chance of a December cut but little justification for one in September. Faust added that political pressure from Donald Trump for lower rates won’t influence the Fed. “If there are no cuts this year, the economy is still solid—and that’s good news for everyone except the president.”

Stocks on the move:

• Oil & Energy – Energy stocks gained as crude prices surged following Israel’s airstrikes on Iran, heightening fears of disruptions in supply from the oil-rich Persian Gulf. Chevron (CVX) and Exxon Mobil (XOM) each rose roughly 1%, though they closed below session highs. Oilfield services firm Halliburton (HAL) jumped over 4%, and EOG Resources (EOG) added more than 3%. 
• Payment Companies – Payment processors came under pressure after The Wall Street Journal reported Walmart (WMT) and Amazon (AMZN) are exploring their own U.S. stablecoins, potentially bypassing traditional card networks and saving billions in transaction fees. Visa (V) and Mastercard (MA) each tumbled more than 5%, American Express (AXP) slid 2%, Capital One (COF) dipped 1%, PayPal (PYPL) dropped 4%, and Block (SQ) lost 2%.
• DraftKings (DKNG) – Shares of the sports betting firm slipped nearly 2% after announcing a 50-cent transaction fee in Illinois starting this September. The move follows a surprise increase in the state’s online gambling tax.
• Adobe (ADBE) – The software giant fell over 5% despite topping Q2 earnings estimates and lifting its full-year guidance. Analysts noted a mild slowdown in subscription and remaining performance obligations (cRPO) growth, along with a tempered outlook for Q4.

                                           Watchlist: ADBE, COIN, NEM, XOM, NVDA, V, AAPL, AMZN




Today’s action

• Asia-Pacific markets mostly advanced Monday, as investors digested rising geopolitical risks and a batch of fresh economic data from China. The latest figures showed Chinese retail sales in May jumped 6.4% year-over-year, indicating solid consumer demand, while industrial production growth cooled slightly to 5.8%. On the equity front, Mainland China’s CSI 300 index was essentially unchanged, while Hong Kong’s Hang Seng slipped 0.12%. 
• Meanwhile, U.S. stock futures increased ahead of the Monday open, even as the Israel-Iran conflict intensified, pushing oil prices higher and stirring concerns about global economic stability. Dow Jones Industrial Average (DJIA) futures were up 9 points (0.02%), S&P 500 futures added 0.14%, and Nasdaq 100 futures rose 0.19%. WTI crude oil (CL=F) futures surged roughly 3% in early Sunday night trading, climbing back above $75 per barrel, as markets braced for further disruptions in supply. Investors are also eyeing key U.S. manufacturing survey data due later Monday, ahead of the Federal Reserve’s interest rate decision midweek.

Bitcoin

• Bitcoin traded near $106,500 on June 16, 2025, with a $2.08 trillion market cap and $15.86 billion in 24-hour volume. The crypto rebounded from last week’s dip below $103,000, triggered by rising tensions between Israel and Iran. Institutional momentum continues to build. Anthony Pompliano is launching a $750 million fund to buy Bitcoin, while Trump Media filed for a “Truth Social Bitcoin ETF” with Crypto.com.
• Meanwhile, the UK is considering allowing retail access to Bitcoin ETNs for the first time in six years. With corporate adoption rising and the Fed’s rate decision looming, Bitcoin is at the center of a volatile but optimistic market. Analysts say a move toward $150,000 is possible if regulatory clarity improves.
  Watchlist: Bitcoin: 100,000-112,000, Ethereum: 1500- 2800, Solana: 80-183

Forex

• The EUR/USD pair started the week with a slight decline during Monday’s Asian session, slipping below the mid-1.1500s amid a modest uptick in the U.S. Dollar (USD). However, the move lacks strong bearish momentum, with the pair still hovering near last week’s high of 1.1630—the strongest level since October 2021. Traders appear cautious ahead of Wednesday’s pivotal FOMC policy decision, with few willing to take bold positions.
• The Japanese Yen (JPY) also opened the week on softer footing against the greenback, but downside pressure remains limited. Expectations of a hawkish Bank of Japan (BoJ) and elevated geopolitical risks are supporting the JPY. Still, the currency remains stuck in a multi-week range as traders await back-to-back central bank decisions, with the BoJ meeting set for Tuesday and the FOMC announcement on Wednesday.
  Watchlist: EUR/USD: 1.0700-1.1650, USD/JPY: 140-151

Basic Materials

• Gold (XAU/USD) briefly touched a two-month high during the Asian session Monday, buoyed by rising geopolitical tensions and persistent trade uncertainties. However, the precious metal struggled to maintain momentum, as a modest uptick in the U.S. Dollar and improving risk sentiment acted as headwinds. Still, expectations that the Federal Reserve may soon lower interest rates continue to support the non-yielding asset ahead of Wednesday’s FOMC decision.
• Meanwhile, West Texas Intermediate (WTI) crude climbed to around $72.15, its highest level since February. The rally was driven by escalating tensions in the Middle East after Israel targeted Iranian natural gas sites, stoking fears of broader supply disruptions. However, uncertainty around potential U.S. tariffs under a possible second Trump administration may temper further gains.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-72.50
  
   

Key Economic Events Today:

EST time
08:30 am: USD Empire State Manufacturing Index


Earnings

BMO (Before Market Open)
RNW    Renew Energy Global
AIOT     PowerFleet Inc.
AMC (After Market Close): LEN, APPS

The TEFS Analyst team wishes you a successful day!