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Europe Market Open: Sentiment boosted as Trump announces Israel-Iran ceasefire, now formally in effect

  • Risk was supported on Wall Street following Iran's "symbolic" strike on a US base in Qatar—de-escalatory in nature, given the clear effort to minimise casualties and collateral damage.
  • Sentiment was further bolstered at the resumption of futures trading after US President Trump announced a ceasefire agreement between Iran and Israel, effective 05:00 BST.
  • Israeli strikes were continuous as markets headed into Iran's proposed ceasefire time (01:30 BST) vs Trump's guided time (05:00 BST).
  • Crude oil tumbled 9% on Monday, with losses of almost 3% seen heading into the European open.
  • European equity futures are indicative of a positive open with the Euro Stoxx 50 future +1.2% after cash closed -0.2% on Monday.
  • Looking ahead, highlights include German Ifo, Canadian Inflation, US Consumer Confidence, NZ Trade, NBH Policy Announcement, BoE’s Bailey, Greene, Ramsden, Pill, Breeden; ECB’s Lagarde, de Guindos, Lane; Fed’s Powell, Hammack, Williams, Collins, Barr, NATO summit, Supply from UK, Germany, US, Earnings from FedEx, Carnival.

SNAPSHOT

US TRADE

EQUITIES

  • US stocks ended the day with gains in what was a very choppy session as Middle East tensions dominated newsflow, with sentiment boosted following a "symbolic" Iranian strike against an emptied US base in Qatar, which was deemed de-escalatory amid ample warning, light payload, and no injuries.
  • Sectors were exclusively firmer, aside from Energy, which was weighed on by the losses in the crude complex.
  • SPX +0.96% at 6,025, NDX +1.06% at 21,856, DJI +0.89% at 42,582, RUT +1.11% at 2,133
  • Click here for a detailed summary.

NOTABLE HEADLINES

  • House GOP leaders were still unsure whether they would cancel the July 4 recess to pass the mega bill, depending on whether the Senate could clear the bill by the weekend as planned, according to a Politico report. The decision depended on what changes the Senate made and whether the House would need to alter the bill.
  • US President Trump posted "Members of Congress are united in their commitment to deliver the One Big Beautiful Bill "
  • NHTSA seeks information from Tesla (TSLA) after Robotaxi debut, with regards to issues seen in online videos, according to Bloomberg. Tesla (TSLA) is sued by the estates of three people killed in a September 2024 crash in Model S with autopilot, according to a court filing.
  • Amazon (AMZN) is to invest USD 54bln in the UK over the next three years, according to Reuters.
  • Starbucks (SBUX), when asked to comment on media report, says it is not currently considering a full sale of its China operation. Earlier, it was reported Starbucks (SBUX) is reportedly mulling full sale of China business, according to Caixin.

GEOPOLITICS - MIDDLE EAST

Iran's attack on US base in Qatar

  • Iran responded to the US attacks over the weekend with an attack aimed at the Al Udeid Air Base in Qatar, although many of its US personnel had been evacuated for a while.
  • NYT reported that Iran coordinated the attacks with Qatari officials and gave advanced notice that attacks were coming to minimise casualties, and Axios’ Ravid noted the Trump admin was aware in advance.
  • As such, given the heads-up warning and it was deemed a more ‘symbolic’ attack, WTI and Brent significantly sold off, ending the session -9%.
  • US President Trump said on Truth Social that Iran had responded to the US strike on its nuclear facilities with a very weak response, which the US had expected and effectively countered. He claimed that 14 missiles were fired, of which 13 were intercepted and one was allowed through as it posed no threat. Trump stated that no Americans were harmed and there was minimal damage. He added, “Perhaps Iran can now proceed to Peace and Harmony in the Region,” and said he would encourage Israel to do the same.
  • Iran's Foreign Minister said Tehran’s attack on a US air base in Qatar was in response to US aggression against Iran’s territorial integrity and sovereignty, adding that Iran would be ready to respond again if the US took further action, according to Reuters.
  • US President Trump posted "CONGRATULATIONS WORLD, IT’S TIME FOR PEACE!"
  • Saudi Arabia stated that Iranian aggression against Qatar was unacceptable, could not be justified, and constituted a flagrant violation of international law, according to Al Arabiya.
  • US Vice President Vance said Iran is now incapable of building a nuclear weapon with the equipment they have because the US destroyed it, according to a Fox News interview.

Israel-Iran Ceasefire

  • US President Trump announced that Israel and Iran have agreed to a complete and total ceasefire, to begin at 00:00 EDT/05:00 BST, and lasting 12 hours. Trump stated that the war would be considered officially ended following this sequence. He praised both nations for ending what he termed “THE 12 DAY WAR.”
  • Under the ceasefire announced by Trump, Iran would stop striking Israel in six hours (at midnight ET on Tuesday), and Israel is expected to stop striking Iran 12 hours after that (at noon ET Tuesday). Then, after another 12 hours, or at midnight ET Wednesday, the war will be considered over, a White House official confirmed to CBS News.
  • US President Trump called the ceasefire between Iran and Israel — which he announced — a wonderful day for the world, according to NBC News. He said he believes the ceasefire is unlimited and is going to go “forever.”
  • US President Trump and Vice President Vance discussed the Israel-Iran ceasefire proposal with Qatar’s emir after Iranian attacks on the airbase in Qatar on Monday, according to an official cited by Reuters. Qatar’s prime minister secured Iran’s agreement to the US ceasefire proposal in a call.
  • Israel's Channel 12 reported that Israeli Prime Minister Netanyahu agreed to a ceasefire with Iran during talks with US President Trump, on the condition that Iran stopped its attacks.
  • Israeli PM Netanyahu announced an agreement with Iran, noting that a comprehensive ceasefire agreement had been reached, according to Al Arabiya.
  • Iranian Foreign Minister Araqchi said there was no "agreement" on any ceasefire or cessation of military operations between Israel and Iran. He stated that Iran had consistently made clear it was Israel that launched the war, not Iran. However, if Israel halted its "illegal aggression" against the Iranian people by 4 a.m. Tehran time, Iran had no intention to continue its response. He added that the final decision on halting Iran's military operations would be made later.
  • Israel attacked a “substantial percentage” of the targets approved as part of Operation Am Kalvi, according to i24 journalist Stein. An Israeli source told him: “We will complete the attacks on all the approved targets within a few days.” The source warned: “If we need to, we have a very large pool of targets. There are still many places to attack in Iran.”
  • Iranian officials made clear to the Trump administration that they would come back to the negotiating table and discuss their nuclear program on the condition that Israel stops bombing them, according to a senior US official via NYT.
  • Iranian Supreme Leader Khamenei posted on X that “the Iranian nation isn’t a nation that surrenders.”
  • US President Trump posted that Israel and Iran came to him “almost simultaneously” and said “PEACE!”, declaring that he knew the time was now. He said the world and the Middle East were the real winners. Trump added that both nations had much to gain and much to lose if they strayed from the road of righteousness and truth. He said the future for Israel and Iran was unlimited and filled with great promise.

Strikes since ceasefire announcement

  • Israeli strikes were continuous as markets headed into Iran's proposed ceasefire time (01:30 BST) vs Trump's guided time (05:00 BST). Iranian media reported that tonight marked the most intense defensive operation since the beginning of Israel’s attacks on Tehran, according to Iran International.
  • Iranian strikes continued after 01:30 BST, with several missiles fired towards Israel. Some reports noted an Iranian ballistic missile hitting an Israeli residential building, with three killed.
  • An Iraqi military official said an unknown drone targeted the Taji military base north of Baghdad, with no casualties reported, according to the state news agency. Al Hadath reported a drone attack on US bases in Iraq, stating that four Iraqi military bases housing US forces were targeted, and added that there were no human casualties resulting from the attacks on the Iraqi military bases.
  • The Israeli military said a fifth wave of missiles had been launched from Iran towards Israel.
  • There were reports of the Israeli assassination in Tehran of Iranian nuclear scientist Mohammad Reza Sediqi.
  • "Drone strike on radar of air base in southern Iraq", according to Sky News Arabia.

After the ceasefire came into effect

  • "Iran fires missiles towards Israel, violating ceasefire announced by Trump", according to BNO Newsroom; " Israeli army: We are monitoring a sixth Iranian attack on Israel", according to Al Jazeera.
  • Iran fired the last round of missiles towards Israel before the ceasefire came into effect, according to Iran's SNN.

TRADE/TARIFFS

  • Japanese Economy Minister Akazawa is reportedly arranging to visit the US as early as June 26th for tariff talks, according to Yomiuri.
  • The EU said it would not give up decision‑making power for a US trade deal, according to the WSJ citing European Commission President von der Leyen.
  • US and South Korean trade ministers reaffirmed commitment to reaching a tariff deal early, according to the South Korean ministry.

CENTRAL BANKS

  • Fed's Goolsbee (2025 voter) said it is critical to look at soft economic data at the current moment of transition. Tariffs are not unlike oil shocks with stagflationary implications. The current form of uncertainty is disconcerting for the economy. Thus far, the impact of tariffs has not been as bad as feared, with the effects blunted by lowered levels and exemptions. It is unclear right now how tariffs will drive inflation, with less immediate pass-through compared to the past. The surprise so far is that inflation has not jumped yet on tariffs. If they do not see inflation jump on tariffs, then the economy is still on the golden path. It has become less clear what some of the best economic indicators mean. So far, immigration enforcement hasn't had a major job market impact, according to Reuters.

APAC TRADE

EQUITIES

  • APAC stocks traded firmer across the board with the region coat-tailing gains from Wall Street, which initially stemmed from Iran's "symbolic" strike on a US base in Qatar—de-escalatory in nature given the clear effort to minimise casualties and collateral damage. Sentiment was further boosted at the resumption of futures trading after US President Trump announced a ceasefire between Israel and Iran, although the Iranian Foreign Minister later clarified that there was no "agreement", but Iran would stop attacking if Israel also halts.
  • ASX 200 was bolstered by most sectors, although energy producers and gold miners bore the brunt of the slide in oil and gold.
  • Nikkei 225 gains and tested the 39k mark to the upside amid broader market optimism, although gains were somewhat capped by gradual JPY strength.
  • Hang Seng and Shanghai Comp conformed to the broader tone across the market amid optimism surrounding the Israel-Iran ceasefire alongside the step-down in tensions with the US.
  • US equity futures (ES +0.6%, NQ +0.8%) were firmer amid the aforementioned geopolitics, although buying was hesitant at one point as traders awaited confirmation from either Iran or Israel regarding the ceasefire, whilst gains were capped by continued strikes towards each others' proposed ceasefire commencements. Futures saw modest downticks on report of an Iranian missile after the US ceasefire, although Iranian state media claimed it was launched before the ceasefire came into effect.
  • European equity futures are indicative of a positive open with the Euro Stoxx 50 future +1.4% after cash closed -0.2% on Monday.

FX

  • DXY was subdued and added to yesterday's hefty losses on the back of the geopolitical unwind, whilst Fed’s Bowman yesterday struck a notably dovish tone and flagged a potential FOMC cut vote in July if inflation pressures stay contained. Traders look ahead to commentary from Fed Chair Powell at 15:00 BST at the semi-annual monetary policy report testimony before the House Financial Services Committee.
  • EUR/USD benefitted from the softer Dollar, with the pair trading on either side of 1.1600 for most of the APAC session and eyeing resistance at 1.1614 (13th and 16th June highs) before the multi-year peak at 1.1631.
  • GBP/USD was also supported by the softer Dollar, with the pair rebounding back above its 50DMA (1.3408) yesterday before hovering around 1.3550 for most of the APAC session, with UK-specific newsflow light ahead of a myriad of BoE speakers on Tuesday.
  • USD/JPY traded lower amid the softer Dollar alongside further efforts for a US-Japan trade deal, with Japanese Economy Minister Akazawa reportedly arranging to visit the US as early as June 26th for tariff talks, according to Yomiuri. USD/JPY found some brief support around 145.50 after declining from yesterday’s 148.00 peak.
  • Antipodeans were firmer in tandem with the broader risk tone, with newsflow from Australia and New Zealand taking a back seat to the macro geopolitics.
  • PBoC sets USD/CNY mid-point at 7.1656 vs exp. 7.1605 (prev. 7.1710); strongest CNY fix since Nov 8th 2024
  • Brazil’s central bank announced a spot dollar auction for 25 June, offering up to USD 1bln. It also announced a reverse FX swap auction on the same date, offering up to 20k contracts, according to a statement.

FIXED INCOME

  • 10yr UST futures traded lower amid the risk appetite emanating from the aforementioned geopolitics, and after settling higher yesterday on the back of Fed’s Bowman striking a dovish tone. Traders look ahead to a slew of Fed speakers including Fed Chair Powell, alongside the 2yr Note auction.
  • Bund futures were softer amid the haven unwind, with contracts looking ahead to the German Ifo and a German Schatz auction.
  • 10yr JGB futures declined in tandem with Western counterparts, whilst Japan’s Finance Minister Kato said he has seen sharp rises in super-long JGB yields and will continue to monitor the JGB market situation and conduct appropriate debt management.
  • Japan sold JPY 1tln 20-year JGB; b/c 3.11x (prev. 2.5x; 12-month average 3.31x); average yield 2.364% (prev. 2.453%).
  • Japan’s finance minister Kato said he had seen sharp rises in super-long JGB yields, and that the government would continue to monitor the JGB market situation and conduct appropriate debt management, according to Reuters.

COMMODITIES

  • Crude futures saw another session of losses after shedding some 9% on Monday in a session that featured a USD +10/bbl intraday swing. Losses initially emanated from Iran’s symbolic strike at the emptied US base in Qatar, with the downside further exacerbated after President Trump announced a ceasefire between Israel and Iran. Brent fell under USD 70/bbl. That being said, heavy firing continued until Iran’s proposed ceasefire commencement of 01:30 BST, after which Israel saw rocket fire from Iran. Trump’s ceasefire was guided for 05:00 BST.
  • Spot gold saw losses on the back of the risk premium unwinding amid the aforementioned geopolitics, with traders cognizant of any ceasefire violations. Spot gold gradually trickled lower and eventually fell under USD 3,350/oz to an APAC low of USD 3,333/oz.
  • Copper futures were supported by the softer Dollar and broader risk appetite.
  • US President Trump on Truth Social said, "Everyone, keep oil prices down. I'm watching!, and "To the DoE: Drill, baby, drill, and I mean now".
  • Kpler's Bakr said "As per our latest images, traffic in Hormuz is unaffected".

CRYPTO

  • Bitcoin rose back above USD 105k amid the risk appetite after US President Trump announced the Israel-Iran ceasefire.

NOTABLE ASIA-PAC HEADLINES

  • Japan’s Chief Cabinet Secretary Hayashi said Japan would hold its Upper House election on July 20th, according to Reuters.
  • Japan’s finance ministry said top foreign exchange diplomat Atsushi Mimura would be reappointed for his second year, as he remained involved in US trade talks, according to Reuters.
  • PBoC injected 406.5bln via 7-day reverse repos with the rate maintained at 1.40%

DATA RECAP

  • South Korean Consumer Sentiment Index (Jun) 108.7 (Prev. 101.8); highest since June 2021.

EU/UK

NOTABLE HEADLINES

  • ECB’s Villeroy said the ECB could still proceed with rate cuts despite volatility in oil markets, according to the FT. He noted that inflation expectations remained moderate.
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