SUMMARY
Overnight, Israel launched military strikes targeting Iran’s nuclear facilities and military infrastructure. The attack triggered a sharp market reaction, with global equities retreating and Brent crude briefly surging over 13% to above $78 per barrel before paring gains, following reports from Iran that no energy infrastructure had been damaged. The heightened geopolitical tension drove demand for traditional safe havens, with the Swiss franc, Japanese yen, and the U.S. dollar all gaining, while the New Zealand and Australian dollars weakened.
Iran has vowed to retaliate with “harsh” measures against both Israel and the U.S., despite U.S. Secretary of State Marco Rubio asserting that the U.S. had no involvement. Risk aversion is expected to dominate market sentiment heading into the weekend, as investors await further developments.
The spike in oil prices has reignited inflation concerns, potentially complicating central banks’ rate-cutting paths. If tensions persist and oil prices remain elevated, policymakers may signal a pause—or even a reversal—in rate cuts.
On another note, Japan’s Prime Minister is expected to meet with former President Trump today to discuss trade tariffs.
