Market Commentary: Monday 23rd June

Geopolitical tension continues to rise. Iran is warning of retaliation and “reserves all options to respond” after unprecedented U.S. airstrikes on its key nuclear enrichment facilities. Oil and gas remain the primary focus, as there is potential disruption to traffic through the Strait of Hormuz — a major artery for global crude and natural gas. Oil and gas futures rose, with WTI crude trading back up at $75 a barrel. Although there have been no signs of disruption to the flow of physical oil yet, analysts are predicting a short-term spike in prices to $80–100 a barrel. Equity market reaction has been muted, as traders await further developments in the Middle East. The S&P 500 declined 0.2%.

On the economic calendar, we are getting a series of PMI data from the Eurozone (9:00 a.m.), UK (9:30 a.m.), and the U.S. (2:45 p.m.). Rising oil prices threaten to snowball into higher-for-longer energy costs that could slow policy loosening from central banks.

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