Yesterday, the Tasnim News Agency reported a halt in message exchanges between the US and Iran. This move reportedly serves as a protest by Iran against Israel's continuous attacks on Lebanon. The probability of reaching a swift agreement between the parties is declining, which is weighing on market sentiment.
Nearly all major European indices closed in the red yesterday.
- The German DAX fell by 0.4%, the French CAC40 by 0.5%, the British FTSE 100 by 0.7%, while the Swiss SMI dropped by as much as 1.8%.
The situation looked slightly better on the American continent, which bodes well for Europe ahead of today's opening.
- Both the S&P 500 (+0.3%) and the NASDAQ Composite (+0.4%) headed upwards, driven by the technology and energy sectors.
🌍 Geopolitics
One of Monday's key themes was the suspension of mediated talks between Tehran and Washington. This is intended to be an Iranian protest against Israel's actions.
- However, Benjamin Netanyahu is continuing attacks against Lebanon. Yesterday, he ordered airstrikes on the suburbs of Beirut, the country's capital.
Meanwhile, Donald Trump gave conflicting signals, stating both that "a deal could be signed within a week" and that he "doesn't care" about the negotiations.
📈 Macroeconomic Data
Yesterday's ISM Manufacturing PMI data for May came in at 54.0, significantly above expectations (53.0) and April's level (52.7). It also reached its highest level since May 2022.
- Notably for the inflation outlook, the ISM Prices Paid index unexpectedly dropped from 84.6 to 82.1. However, it still remains at historically very high levels.
- On the flip side, data for New Orders (56.8) and Employment (48.6) surprised to the upside.
Ahead of us today is the release of May's inflation data from the Eurozone (11:00 AM) and April's JOLTS job openings report from the US labor market (4:00 PM).
🌏 Asia
The sentiment across Asian markets remains mixed.
- The Chinese Hang Seng is recording substantial gains (+2.3%), supported by tech giants – Tencent (+8.9%) and Meituan (+8.5%). BYD (+6.5%) and Alibaba (+5.9%) are also performing well today.
- In contrast, the Japanese NIKKEI 225 (-0.8%) and the South Korean KOSPI (-0.5%) are flashing red.
💱 Currencies
As a result of a general risk-off sentiment, the US dollar started the week on a stronger footing. Among the major currencies, only the British pound is performing better at the moment.
- At the bottom of the pile is the New Zealand dollar (-0.9%), which is giving back some of the gains made in recent days following the RBNZ's hawkish turn.
- Scandinavian currencies, heavily dependent on market sentiment, are also recording losses (around -0.5%).
- Among emerging market currencies, the Colombian peso stood out, registering its strongest single-day appreciation in over 15 years yesterday. The move is a reaction to Abelardo de la Espriella's surprisingly strong showing in the first round of the presidential election.
🛢️ Commodities
Driven by renewed signs of escalation, oil and LNG prices moved higher yesterday. Today, we are seeing a modest pullback.
- Brent is down 0.8% to around $94 per barrel, while WTI dropped 1% to $91.
- Gas on the Dutch TTF exchange is easing by 0.2% to $48 per MWh, and NATGAS is down 0.3% at $3.17 per MMBtu.
On the other hand, precious metals are gaining.
- Gold is up 0.9% to $4,525 per troy ounce, while silver jumped 2.5% to $76.7.
₿ Cryptocurrencies
Key cryptocurrencies continue their downward trend.
- Bitcoin is weakening by 1.4% today to around $70,380, while Ethereum is down 0.8% at $1,987.
—
Michał Jóźwiak, Financial Market Analyst at XTB
Daily summary: Tech sector holds valuations despite risk
Robinhood under the Supreme Court's Eye
BREAKING: Iran suspends negotiations🚨
US OPEN: The technology sector gains, so does Oil
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