MARKET WRAPS
Stocks:
European shares bounced back on Friday after the White House signaled it would delay a decision to launch strikes against Iran.
That has eased fears of an immediate military escalation and provided some relief to investors, IG said.
But the uptick in mood could be short-lived.
Weaker-than-expected U.K. retail sales data this morning raised fresh concerns over the state of the British economy.
Later today, European foreign ministers are due to hold talks with Iranian officials in Geneva to press them to de-escalate the conflict.
Market Insight
Shares of semiconductor companies in Europe edged higher, following gains in the Stoxx Europe 600 and other European indexes.
ASML Holding, ASM International, Infineon Technologies and STMicroelectronics were all up.
U.S. Markets:
Stock futures pointed to a slightly weaker open after the holiday, with Trump's delay on U.S. involvement in Iran appearing to have had limited positive impact.
The 10-year Treasury yield was little changed.
Forex:
The euro rose back above the key $1.15 level as markets priced out some geopolitical risks from the exchange rate, but gains should remain limited, ING said.
"The situation in the Middle East remains too volatile to make a strong directional call on [euro versus the dollar], but the overarching risk of the U.S. joining the conflict could keep it from aggressively retesting $1.1600 in the next few days."
The dollar fell on the Trump administration indicating a delay to its decision on Iran.
The news eased immediate fears of U.S. military escalation and reduced safe-haven flows to the dollar.
Sterling fell against the euro and pared gains versus the dollar after the weaker-than-expected U.K. retail sales data.
ING said the Bank of England will likely stick to gradual interest rate cuts but sterling could still weaken if upcoming U.K. data are weak.
Bonds:
The 10-year Bund yield was trading flat.
Citi Research is neutral on Bunds , forecasting the 10-year yield at 2.5% on average in the second half of the year.
Bunds are taking punches but essentially standing still, which is expected to persist for the second half of 2025, Citi added.
At the same time, eurozone peripheral government bonds have become more attractive.
"Improving economic trends in Europe suggest a further spread tightening of the periphery versus Bunds," Citi said.
Eurozone government bond spreads over Bunds generally remained at historically tight levels, but the room for further narrowing was limited near term, ING said.
"The appetite for aggressive tightening positions at such levels will be limited going into a typically less liquid and more volatile summer period."
The 10-year Treasury yield was little changed but could slide if investors turned to them in a bid to hedge growing geopolitical risks, Exness said.
BNP Paribas Markets said U.S. rates markets will continue to focus on realized economic data on labor market and inflation, both of which have held up relatively steady.
Yields on gilts fell following the weaker-than-forecast U.K. retail sales data.
Energy:
Oil prices pared gains from the previous trading session after news of Trump's two-week deadline for a decision on whether to strike Iran.
"While the oil price is likely to maintain some geopolitical premium, Brent crude could move back below $75 per barrel, after touching $79 per barrel on Thursday, as fears of a major escalation in the conflict ease, " XTB' said.
European natural-gas prices fell following Thursday's rally, as concerns over a potentially imminent U.S. intervention in Iran eased.
"We believe that most of the price rally is risk premium driven, but lower Norwegian flows due to seasonal maintenance is also forcing additional spot LNG purchases which adds to the price pressure," DNB said.
Metals:
Gold futures fell on fading hopes for substantial U.S. interest rate cuts, offsetting safe-haven demand from geopolitical risk.
Base metal prices fell in subdued trading. Geopolitical tensions have kept investors relatively cautious on risk assets, driving down demand for industrial metals.
EMEA HEADLINES
Almost a Third of Eurozone's U.S. Trade Surplus Is Due to U.S. Firms, Says ECB
Almost a third of the eurozone's goods trade surplus with the U.S. is accounted for by sales of products manufactured by the affiliates of American businesses, which also account for most of the eurozone's deficit in the trade in services, the European Central Bank said Friday.
In its latest Economic Bulletin, economists at the central bank said that should the activities carried out by those affiliates be moved back to the U.S. in response to higher tariffs or changes to U.S. tax policy, the eurozone economy would be smaller, but the impact on employment and incomes would likely be limited.
EU to Restrict China's Participation in Medical Devices Procurement
The European Union said it plans to exclude Chinese companies from the bloc's government purchases of medical devices after concluding that EU manufacturers don't have equal access in China, widening trade tensions between Brussels and Beijing.
The European Commission, the EU's executive arm, said Friday that the measure will apply to purchases exceeding 5 million euros ($5.7 million). The decision follows the conclusions of the first investigation under the International Procurement Instrument, or IPI.
U.K. Consumer Sentiment Edges Up Again Despite Global Turbulence
The mood among British consumers improved a little this month, though global turmoil could see confidence darken again ahead.
Consumer confidence improved two points to minus 18, according to research group GfK's monthly index for June, published with the Nuremberg Institute for Market Decisions. That built on the previous month's rise and came against economists' expectations for no change.
GLOBAL NEWS
Global Markets Mixed; U.S. Markets Resume After Holiday
Global markets were mixed Friday after the U.S. holiday, with contract expiries adding some complexity to moves in oil.
U.S. stock futures pointed to a slightly weaker open when trading resumes, even after President Trump's delay to a decision on U.S. involvement in the Israel-Iran conflict improved risk sentiment a touch elsewhere. Oil pared recent gains, the dollar edged lower and Treasurys were pretty much flat early in Europe.
China's Midyear Shopping Festival Pulls In Record Online Sales
China's second-largest shopping event of the year generated record sales, with online spending by consumers exceeding $100 billion as government measures bolstered consumption among cautious households.
The value of goods sold by Chinese e-commerce platforms reached an all-time high during the "618" shopping festival that took place from mid-May to mid-June this year, according to figures from data provider Syntun.
China Flexes Chokehold on Rare-Earth Magnets as Exports Plunge in May
China's exports of rare-earth magnets plummeted after it imposed controls on their overseas sale, emphasizing Beijing's dominance of a critical input into electric vehicles and jet fighters that has taken center stage in tensions with the U.S.
Total export volumes of rare-earth magnets from China fell 74% in May from a year earlier, according to a Wall Street Journal analysis of Chinese customs data. That was the biggest percentage decline on record dating back to at least 2012. Exports had fallen 45% in April in year-over-year terms. The 1.2 million kilograms of rare-earth magnets exported in May marked the lowest level since February 2020, during the Covid pandemic.
MAGA Brawls Over Prospect of Trump Joining Strikes on Iran
WASHINGTON-President Trump's political base is splintering over the prospect that the U.S. could join Israel's assault on Iran-and the White House is trying to quell the backlash.
In recent days, White House officials have quietly reached out to MAGA influencers, according to people familiar with the matter, aiming to explain Trump's possible shift away from a diplomatic solution.
Appeals Court Lets Trump Keep Control of California National Guard Troops in L.A.
A federal appeals court on Thursday night allowed President Trump to maintain command of the California National Guard in response to the Los Angeles protests, blocking a lower court that ordered him to return those forces to the state's control.
A three-judge panel of the Ninth U.S. Circuit Court of Appeals said Trump's decision to federalize the Guard was entitled to a high degree of deference. Under that standard, "we conclude that it is likely that the President lawfully exercised his statutory authority," the panel wrote.
Israel's War on Iran Is Costing Hundreds of Millions of Dollars a Day
Israel's conflict with Iran is costing the country hundreds of millions of dollars a day, according to early estimates, a price tag that could constrain Israel's ability to conduct a lengthy war.
The biggest single cost are the interceptors needed to blow up incoming Iranian missiles, which alone can amount to between tens of millions to $200 million a day, experts say. Ammunition and aircraft also add to the price tag of the war, as does the unprecedented damage to buildings. Some estimates so far say that rebuilding or repairing damage could cost Israel at least $400 million.
Write to gareth.mcpherson@wsj.com
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
June 20, 2025 05:07 ET (09:07 GMT)
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