TL;DR

Israel-Iran ceasefire lifts global equities, oil drops; US-EU trade tensions rise; China tightens rare-earth, pushes yuan.

Highlights

• Global equities rallied as the Israel-Iran ceasefire, brokered by Trump, eased geopolitical risk; S&P 500 and Nasdaq 100 near record highs, VIX down 9%1.
• Oil prices fell sharply (Brent -6% to $67, WTI -6% to $64.37) as war premium unwound and Trump allowed China to resume Iranian crude purchases5.
• Iran’s parliament ended cooperation with the IAEA after nuclear site strikes, raising nuclear transparency and diplomatic risks2.
• US intelligence reports recent strikes on Iran’s nuclear facilities delayed, but did not destroy, its enrichment program3.
• Israel designated Iran’s central bank and key lenders as terrorist entities, expanding financial sanctions and asset freeze powers4.
• NATO raised its defense spending target to 5% of GDP by 2035, with broad member support6.
• EU threatened tariffs on Boeing and other US goods if new US tariffs are imposed, escalating transatlantic trade tensions ahead of the July deadline7.
• China tightened controls on rare-earth sector experts, adding to export bottlenecks and global supply chain uncertainty8.
• China accelerated yuan internationalization, launching new FX and commodity contracts for foreign investors as the dollar weakened9.
• Guotai Junan became the first mainland-backed broker to win a full Hong Kong crypto license, doubling its shares and lifting other crypto-linked stocks10.
• Fed Chair Powell said US banks may serve crypto firms if risk controls are met, easing regulatory barriers19.
• Worldline shares plunged over 20% after media reports alleged years of fraud cover-ups and weak AML controls18.

Commentary

Markets responded positively to the Israel-Iran ceasefire, with global equities rallying and volatility sharply lower. The removal of the immediate threat to Middle East energy supplies drove oil prices down, erasing the recent war premium15. Trump’s decision to allow Chinese purchases of Iranian oil further pressured crude benchmarks, raising questions about US sanctions enforcement and OPEC+ supply discipline5. While the ceasefire has improved risk sentiment, Iran’s move to cut off IAEA access and the limited damage to its nuclear program highlight that underlying geopolitical risks remain23.

On the policy front, NATO’s new 5% GDP defense spending target signals a structural shift for European fiscal priorities and could support the defense sector, but also implies higher sovereign borrowing6. Meanwhile, the EU’s threat of retaliatory tariffs on US goods, including Boeing aircraft, raises the risk of renewed transatlantic trade friction as the July deadline approaches—potentially impacting industrials and exporters on both sides7.

China remains a key focus for global supply chains and currency markets. Tighter controls on rare-earth sector experts add to ongoing export bottlenecks, exacerbating uncertainty for manufacturers dependent on critical minerals8. At the same time, Beijing is pushing yuan internationalization with new FX and commodity contracts and easier foreign access, as the dollar shows signs of weakening9. This may gradually increase foreign participation in Chinese assets, though structural barriers remain.

In digital assets, regulatory signals are mixed. Hong Kong’s approval of a full crypto license for Guotai Junan boosted crypto-related equities and points to further institutionalization in Asia10, while Fed Chair Powell’s comments lower barriers for US banks to serve crypto clients19. However, Worldline’s sharp selloff on fraud allegations underscores persistent compliance risks in the payments sector18.