Stock markets across the globe showed a dip on Tuesday, with the Dow Jones Industrial Average opening over 100 points lower during the early trading hours. This occurred in response to the ongoing tensions between Israel and Iran, with both nations actively engaged in conflict. The S&P 500 and Nasdaq Composite exhibited downward trajectories as well, each trading 0.3% and 0.5% lower respectively.
Conflict versus a chance of peace
These significant falls are largely attributable to investors globally speculating on the likelihood of an immediate ceasefire as opposed to a potential aggravation in the Israel-Iran hostilities. Speculation only increased following U.S. President Donald Trump’s recent statements and social media activity related to the conflict. The President’s hasty departure from the G7 summit fuelled apprehensions that a quick resolution was most likely not on the cards.
Trump’s response
In a public announcement, Trump clarified that French President Emmanuel Macron was mistaken to believe that Trump left the G7 Summit to mediate peace between Israel and Iran. He added that Macron had no clue about his real intentions for returning to Washington, assuring that it wasn’t to bring about a ceasefire between the two nations fighting each other. He then further criticized the French President for his frequent misinterpretations.
Consequences in markets
The unfavourable remarks triggered a flurry of reactions from various global markets. Oil prices shot up by 2%, while the virtual currency world witnessed a downfall. The popular cryptocurrency, Bitcoin (BTC), moved downwards from above $108,000 to approximately $105,500.
Trending stock patterns
However, it’s noteworthy to mention that stocks have been displaying an unanticipated weakness after showing considerable resilience the previous week. The top U.S. indices reflected this through an upswing on June 16, with the S&P 500 continuing to hold above 6,000 despite the dreadful missile strikes on Tehran and Tel Aviv.
Expert opinion
The performance of the markets was observed and scrutinized by Eric Balchunas, the senior ETF analyst at Bloomberg. He believes the nigh indestructibility of the U.S. stock market could be attributed to long-term investors who have surrendered to timing the market, choosing to trust its processes instead, and see their relationship with their U.S. index funds as a long-term commitment.
Latest economic data
On the economic side, new figures published on June 17 revealed that U.S. retail sales dwindled in May, showing a setback in consumer spending. Apparently, the retail sales fell off by 0.9%, substantially outstripping the anticipated drop of 0.6%.
Anticipations from Federal Reserve
Simultaneously, the Federal Reserve’s two-day policy meeting commenced on Tuesday, with markets around the world keenly observing any change in language when the FOMC decision was announced on the following day, Wednesday, June 18. The majority of analysts heavily anticipate the Fed to continue maintaining steady interest rates.
