Market Commentary: Tuesday 17th June

Risk sentiment remains cautious as Trump called for the evacuation of Tehran. Despite this, global equities have remained resilient so far, as past instances of geopolitical tension have generally been contained. Most of the price action continues to be seen in oil and gold (XAU at $3,388). The recent rally in oil (WTI at $72.17) is putting some pressure on stock prices. If this trend continues, we could see a broader sell-off, but for now, it remains contained.

The Bank of Japan held rates as expected at 0.5%. It also announced a slower pace of JGB selling, aiming to reassure investors and reduce recent volatility in yields. Attention now turns to the Federal Reserve meeting tomorrow, where rates are widely expected to remain on hold. Markets will be watching closely for any explanation of the Fed’s continued holding stance, especially in light of recent soft inflation prints.

At the G7 gathering in Alberta, the Japanese Prime Minister failed to reach a trade agreement with Trump. However, the UK agreed to implement previously disclosed trading terms, including slashing US tariffs on British exports and raising UK quotas on American agricultural products.

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