TL;DR

Israel strikes Iran; gold hits record on safe-haven demand; EU to ban Russian gas by 2027.

Highlights

• Israel launched over 50 airstrikes on Iranian nuclear and missile sites near Tehran; Iran threatened retaliation and warned the U.S. against involvement12.
• U.S. and U.K. are deploying advanced fighter jets and tankers to the Middle East; regional military installations on high alert3.
• Iran’s ex-economy minister called for a 100-day ban on unapproved oil/LNG shipments through the Strait of Hormuz; no official enforcement yet4.
• Gold is up 30% YTD, trading near $3,386/oz, outperforming other safe-haven assets13.
• Bitcoin fell to $104,000 after Israel’s strike on Iran triggered $1B in crypto liquidations14.
• China’s rare-earth exports dropped 61% YoY in May, heightening supply concerns for Japan and India7.
• EU proposed legislation to ban new Russian gas contracts from 2026 and phase out all Russian gas by end-20276.
• Japan posted a ¥638B May trade deficit as exports to the U.S. (autos -24.7%) and China declined8.
• U.S. signals China tariff pause will end in July; Chinese exports shifting to ASEAN, raising regional trade tensions910.
• China suspended EV trade-in subsidies in six provinces after funds were depleted, increasing uncertainty for automakers11.
• U.S. Senate passed the GENIUS Act, the first federal stablecoin regulation; JPMorgan to pilot a USD deposit token on Coinbase ’s Base blockchain1617.
• China will allow foreign investors to trade ETF options from October 9, further opening its derivatives market15.

Commentary

Rising tensions in the Middle East are front and center after Israel’s large-scale strikes on Iranian nuclear and missile facilities1, with Iran promising a response and warning the U.S. against direct involvement2. The U.S. and U.K. are rapidly reinforcing their military presence in the region3, and any escalation or disruption—especially in the Strait of Hormuz—poses immediate risk to global energy markets. While the proposed 100-day ban on unapproved oil and LNG shipments is not official policy, even the suggestion has the potential to unsettle oil and LNG flows4.

Safe-haven demand is pronounced: gold ’s 30% YTD gain, now near all-time highs, reflects persistent geopolitical risk and shifting expectations for Fed policy13. In contrast, crypto markets have been volatile and risk-off, with Bitcoin ’s sharp drop and significant liquidations following the Israel-Iran escalation14. Regulatory momentum in the U.S.—notably the Senate passing the GENIUS Act16 and JPMorgan ’s pilot of a USD deposit token on Coinbase ’s Base blockchain17—signals growing institutionalization of digital assets, but near-term sentiment remains fragile.

In Asia, China’s 61% YoY rare-earth export drop is pressuring supply chains in Japan and India7, accelerating diversification efforts and raising costs for sectors dependent on advanced materials. China’s halt of EV trade-in subsidies in several provinces adds further uncertainty for automakers already contending with weak demand and policy unpredictability11. Japan’s trade deficit, driven by falling exports to the U.S. and China, underscores ongoing headwinds for its economy and complicates the Bank of Japan’s policy outlook8.

The EU’s move to phase out Russian gas by 2027 marks a significant shift in European energy strategy, likely to support LNG prices and drive further diversification6. Meanwhile, U.S.-China trade tensions remain unresolved, with tariffs set to resume9 and Chinese exports increasingly diverted to ASEAN, raising the risk of protectionist responses in the region10.

Traders should closely monitor Middle East developments for any energy supply disruptions, safe-haven flows into gold and Treasurys, and volatility in Asian equities and currencies tied to trade and supply chain news. Crypto markets remain sensitive to both geopolitical and regulatory headlines. Key policy shifts in the U.S., EU, and China will continue to shape global risk and opportunity.